There are two answers to this question: the legal answer and the practical answer.
Legal answer: Three years
First, the legal answer is in the tax law. Technically, except in cases of fraud or a back tax return, the
IRS has three years from the date you filed your return (or April 15, whichever is later) to charge you (or,
“assess”) additional taxes. This three-year timeframe is called the
assessment statute of limitations
Additional taxes usually come in the form of an
(called a CP2000).
Even though the IRS can legally audit you until the three-year assessment statute ends, in practice, it
rarely works this way.
Practical answer: 26 months
The practical answer lies in a procedural policy at the IRS called the “examination cycle.” The Internal
Revenue Manual (basically, the IRS training guide) says that IRS agents must open and close an audit within
26 months after the return was filed or due (whichever is later).
The IRM also says that IRS agents should “strictly adhere to” this guideline, to make sure that the audit
and other processing needs are complete within the three-year timeframe.
Most audits start a few months after you file your return
For these audits, the IRS is often freezing refunds. Because the IRS has to pay interest on refunds it pays
late, the IRS tries to start and finish these audits quickly. They are usually done by
. Once you answer the IRS’ questions about the
accuracy of your return, the IRS will release your refund.
Audits that start soon after filing usually focus on tax credits, such as the earned income tax credit and
the child tax credit. The IRS often wants to verify filing status, dependents, and other return items before
sending your refund.
Other IRS audits generally start within a year after you file
These are often mail and
questionable items on your return
The most comprehensive IRS audits can start later. These are called
, when the IRS visits you or your business.
However, as a rule of thumb, if the IRS hasn’t audited your return within two years after you filed it, the
IRS generally won’t audit your return unless there’s something egregious.
How do you know if you’re selected for audit?
If the IRS audits you, you’ll get a notice telling you that the IRS selected your return for
Dealing with the IRS in an audit can be difficult. The best course of action is to respond on time,
thoroughly, and advocate your tax return position. One complete response, sent on time to the IRS, will
avoid confusion and lead to the best results.
Learn exactly how to handle an IRS audit.
If the IRS asks you to meet in person or go to an IRS office, you should consider
hiring a professional to represent you
IRS audit procedures can be complicated and almost impossible to navigate successfully. An experienced tax
professional that can “speak IRS” will likely produce a better outcome with less stress and anxiety for
taxpayers under audit.
Look for a tax professional who is licensed to practice before the IRS (usually a CPA, enrolled agent, or
attorney) and has experience in dealing with the IRS.
You should expect to pay a few hundred dollars for a mail or office audit for a tax pro to
you. Field audit representation is likely more
expensive because your tax professional will be spending a lot of time with the IRS.