Irs Audit Statute Of Limitation_Informations
Q.By law, can the IRS audit in Statute of limitaion ? If yes, how far back can they go? What would trigger them to go back and look on prior year? If I just realized that I made a mistake on a prior year tax return, am I supposed to call them and fess up? Thanks.
A.They can go back 3 years unless they have evidence that you understated your income by more than 20%. There are some depreciation issues that may allow them to go back further. You are supposed to go back and amend a return that you realize is incorrect. Most tax professionals would advise you to forget about it. If the IRS finds it, they'll usually fix it for you, though usually incorrectly. If there is a lot of money at stake &/or you are having trouble sleeping at night, you can file a 1040X and fix the mistake now. If it has been more than 3 years, the statute of limitations should protect you. From a Quicken.com web page: "The IRS has three years from the date your return was filed or due, whichever is later, to audit your return. (Fraud is the exception here, too; there is no statute of limitations for fraud. If you omit income that is more than 25% of the gross income reported on your return, the statute of limitations is six years.) In practice, however, if your return isn't opened for audit within 20 months, it probably never will be. Old cases are as popular as unwelcome houseguests with the IRS. " That is 25% not 20%. Furthermore, if there is fraud involved -- there is no statute of limitations.
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