The prospect of a tax audit can be daunting, especially if you are worried about tax evasion charges. You may wonder how far back the Internal Revenue Service (IRS) can examine your tax history.
Understanding the scope of their investigation is crucial for anyone needing legal help. In this blog, we’ll explore the timeframes and exceptions that could affect you so you can approach your situation with confidence and clarity.
What taxpayers need to know
When it comes to tax audits, the IRS typically adheres to a three-year rule. This means they can review and scrutinize your tax returns for the past three years. However, if you’ve understated your income by more than 25%, the limit can extend to six years.
However, the IRS has no statute of limitations in cases of suspected tax evasion. If fraudulent activity is suspected, such as claiming false deductions or intentionally underreporting income, the agency can investigate as far back as it sees fit.
If you’ve filed honest returns, maintaining records for seven years is generally sufficient. However, if there’s any doubt or potential error in your filings, holding onto records for longer could be wise.
Protect your rights as a taxpayer
Understanding how far back the IRS can go in investigating tax evasion is crucial for anyone facing an audit or investigation. While the standard timeframes are three to six years, fraudulent activity opens the door for unlimited scrutiny.
By keeping thorough records and seeking professional legal assistance, you may be able to overcome this challenging situation with greater confidence. Remember, being informed is the first step toward developing a robust defense.