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November 9, 2018


How far back can the IRS investigate during an audit?

Getting audited by the Internal Revenue Service (IRS)? You likely have a number of questions. The first may be along the lines of: is this for real? If you got a phone call stating you are getting an audit, it may be a scam. If, however, you received a letter from the IRS stating the agency is going to review your tax filings, the correspondence is likely legit.

What is the IRS going to review? One of the next questions likely involves timelines. Just how far back will the agency look into your tax filings? The answer depends on a number of factors, but the IRS can generally look back three years.

There are exceptions to this three-year rule of thumb. One example: discovery of “substantial errors.” The government can extend the look back period to six years if the agency deems substantial errors are present in your returns.

Can I challenge an audit? Taxpayers have rights. When it comes to an audit by the IRS, these rights include the right to fair treatment by the agency, the right to privacy and the right to know why the agency requests additional information. Taxpayers also have the right to representation during the course of an audit and the right to appeal the outcome of the audit.

How does the appeal process work? Taxpayers generally have two options if they disagree with the result of the audit: go through mediation or appeal the finding. Mediation is a type of legal negotiation that can help both parties find a resolution without going to court. The appeals process involves use of an informal administrative process.