When you file your taxes, the IRS can technically audit you for up to three years. This means if you missed reporting something correctly, the IRS can go back as far as 3 years to catch those mistakes. After 3 years, the IRS would technically be barred from finding those mistakes… until now. The IRS can now go back as far as 6 years if you failed to report 25% or more of your income. The Supreme Court ruled that 3 years was plenty of time, but Congress recently overruled the Supreme Court, granting the IRS up to 6 years to catch those errors.
Another thing you may not know is that the IRS can audit you as far back as they want to if you omit filing any tax forms.
Once the IRS has assessed that you made a mistake on your return, they can typically collect on those taxes for up to 10 years. (The normal statute of limitations for collection upon a debt is 6 years in Tennessee.) It’s important to keep good records of your tax returns and keep your old tax returns on file in case you are ever audited.
If you are audited and have been found to owe a large amount of back taxes that you cannot pay, you may consider a Chapter 13 bankruptcy, which can help you successfully reorganize and repay your debt at a rate you can afford, avoiding costly penalties and potential tax liens or levies from the IRS. If you have questions about how bankruptcy can help with any back taxes that you owe, please contact our office for a free consultation.
Flexer Law is a debt relief agency. We help people file for bankruptcy relief under the U.S. Bankruptcy Code. The attorneys at Flexer Law are not tax advisers and cannot give tax advice.