Statute of Limitations on Tax: IRS Deadlines You Must Know

The three-year assessment statute under IRC Section 6501(a) begins to run on the date the return is filed or the due date of the return, whichever is later, and the IRS that issues a Notice of Deficiency after the three-year period has expired has assessed the tax outside the statute of limitations, entitling the taxpayer to raise the expired statute as an absolute defense in Tax Court.

Business tax and corporate tax refund counsel can evaluate whether the IRS's three-year assessment statute under IRC Section 6501(a) has expired for the specific tax year, assess whether the return was filed in a manner that triggered the running of the period, and advise on whether the statute provides a complete defense to the proposed IRS assessment.

The six-year extended assessment statute under IRC Section 6501(e) applies when the taxpayer omits from gross income an amount exceeding twenty-five percent of the gross income stated in the return, and the Supreme Court held in Colony, Inc. .. Commissioner that the six-year period applies to overstatements of basis and similar omissions rather than to every item that reduces gross income.

Tax audits and adjustments and gift tax reporting counsel can advise on whether the six-year extended assessment statute under IRC Section 6501(e) applies because the taxpayer omitted more than twenty-five percent of gross income, assess whether the IRS correctly identified the omitted items, and develop the defense strategy for challenging the six-year rule.

IRC Section 6501(c)(1) provides no statute of limitations when the taxpayer files a false or fraudulent return with intent to evade tax, and the IRS bears the burden of proving fraudulent intent by clear and convincing evidence, with common indicia of fraud including underreporting income, claiming fictitious deductions, concealing assets, and failing to file returns for multiple years.

Tax fraud and international tax compliance counsel can advise on the specific legal standards the IRS must satisfy to invoke the unlimited assessment statute under IRC Section 6501(c)(1), assess whether the evidence is sufficient to establish that the taxpayer filed a fraudulent return with intent to evade tax, and develop the defense strategy.

IRC Section 6501(c)(8) provides that the statute of limitations for the entire tax year is suspended until the required international information return is filed plus three years when the taxpayer fails to file Form 5471, Form 5472, or Form 8938, and the IRS can assess tax for the entire tax year, not just the items related to the unreported international interests.

FATCA and family gift tax counsel can advise on the specific extended statutes applicable to failures to file required international information returns, assess whether the taxpayer's failure to file triggered an extended or unlimited statute, and develop the compliance and defense strategy.

The IRS has ten years from the date of a valid tax assessment under IRC Section 6502 to collect the assessed tax through levy or court proceedings, and the CSED is extended beyond the ten-year base period by filing an installment agreement request, submitting an offer in compromise, filing for bankruptcy, or signing a Form 900 collection statute waiver.

IRS tax levy and IRS tax debt counsel can advise on the specific date on which the ten-year collection statute under IRC Section 6502 expires for each assessed liability, assess whether any events have tolled the CSED and extended the IRS's collection authority, and develop the collection defense or resolution strategy.

The table below identifies the five principal statute of limitations periods applicable to federal income tax matters, the IRC section that establishes each period, the applicable time period, and the key exception or trigger that extends or eliminates the standard period.

Bankruptcy for tax relief and IRS audit defense counsel can advise on the specific statute of limitations applicable to the taxpayer's situation as identified in the matrix, assess whether any tolling event has extended the applicable statute, and develop the legal strategy for asserting the statute of limitations as a defense.

The assessment statute is tolled by the filing of a Tax Court petition and remains suspended until the Tax Court decision becomes final plus sixty days, and the collection statute is tolled during the period the IRS is prohibited from levying including the entire duration of a bankruptcy case plus six months after the bankruptcy is discharged or dismissed.

Inheritance tax and estate tax counsel can advise on the specific events that toll the assessment and collection statutes under the Internal Revenue Code, assess whether a pending Tax Court petition, installment agreement, offer in compromise, or bankruptcy filing has extended the applicable statute, and develop the legal strategy for managing the tolling period.

Under IRC Section 6511, a taxpayer must file a refund claim within three years from the date the return was filed or two years from the date the tax was paid, whichever is later, and the amount of the refund is limited to taxes paid within the look-back period applicable to the specific circumstances of the claim.

Cryptocurrency tax and cryptocurrency taxation counsel can advise on the specific deadlines applicable to the taxpayer's refund claim under IRC Section 6511, assess whether the two-year or three-year look-back period applies and whether the claim was filed within the applicable period, and develop the refund claim strategy.