Tax Audit Time Frame

The Internal Revenue Service regularly performs tax audits of both corporate taxpayers and individuals. Although tax audits are conducted year-long, they often spike during the few months after the tax season, especially when problematic or misleading returns come under the IRS microscope.

Irrespective of when an “examination” or audit commences, an IRS auditor would be assigned to your case.

While IRS tax auditors are trained to be efficient, they’re also well trained to be comprehensive and thorough – and depending, to a large extent, on the structure and complexity of the individual or company’s tax situation, the IRS audit process usually takes more time than you may estimate as a taxpayer.

This could be particularly disconcerting to taxpayers who face an egg shell audit case in which the main goal is getting the IRS audit closed as early as possible in order to mitigate any criminal or civil tax exposure which underlies an audit.

Normal Circumstances

In a majority of cases, the IRS would wrap up their tax audit within one year. Even though the agency has up to three years to audit a tax return, the IRS prefers to conclude audits before the expiration of the statute of limitations.

In fact, according to the IRS training guide, IRS agents have to “strictly adhere to” the relevant guideline to close tax audits within a period of 26 months after the date of filing or due date of the return, whichever is later.

Rare Cases

In fewer cases where tax fraud or misreporting is involved, the agency does not have to comply with the statute of limitations. So, if there is a huge amount of unreported income, then the statute of limitations is 6 years. However, the IRS seldom goes into a tax audit assuming this extended statute of six years.

The agency assumes that 3 years is the limit, and auditors would usually work to conclude their audit within this timeline.

Type of Audit Is Also Relevant

Mail audits tend to be usually straightforward and quick. The agency conducts these audits through mail, often notifying the taxpayer within seven to eight months of filing. Most mail audits generally wrap up within a period of three to six months; it depends on the specific issues and how completely and quickly you respond to the IRS audit letter.

Also, office audits typically move quickly. Your tax professional would meet with the IRS agents at an IRS office. Keep in mind that the agency usually begins these tax audits within one year of filing the return, and completes them within three to four months.

That being said, expect some delay in case you do not furnish complete information or the IRS auditor finds significant issues and would like to expand your audit into other areas.

On the other hand, a field audit could last up to one year or even more in case there are issues. The agency reserves these field audits for intricate or complex situations, which involve small businesses.

Have a tax audit question? What is the longest or shortest tax audit you have experienced? Contact Venar Ayar.