when does the IRS has to decide that they want to audit your tax return
Q.I am wondering when does the IRS has to decide that they want to audit your tax return. From what I can tell, it is three years...? So, let's say my 1998 return was filed on April 15, 1999 - they have until April 15, 2002 to determine if they want to audit it? What happens if I filed an amended return last year - is it three years from the original file date - or three years from the amended file date?
A.They have three years unless there was 25% understatement of income, in which case they have six years, or fraud, in which case there is no SOL. The amended return does not extend that period. That's correct. If IRS hasn't notified you by now that your 1998 return was selected for audit I think you can safely assume IRS accepted the return as filed. Absent very unusual circumstances, IRS won't open an audit on a year with such short time remaining on the audit statute An amended return filed close to the statute expiration date, i.e. 04/15/2002 in this case, would give the IRS a short statutory extension of the assessment expiration date. I'd have to look it up to see how long, but it since it's not applicable to you I'm not going to spend the time. In your case the amended return doesn't affect the 3-year statute. An amended return, filed before 60 days before the end of the period has no effect on the period whatsoever. A BALANCE DUE amended return filed less than 60 days before the end of the period will extend the period but with respect to the amended return only. Generally, balance due amended returns are not examined and the additional time is merely to give the IRS time to enter the revised self-assessment. A CLAIM FOR REFUND amended return may be examined at any time before the claim is actually paid, even if this is after the three year period. This is because no additional assessment will be made, and reductions to previously made assessments don't have a period of limitations.
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