How long does the IRS have to audit an amended return?

January 03, 2020 by Jean Lee Scherkey, EA
Amended Tax Return on a keyboard button

“¿Dónde esta su juego?” I said confidently knowing my high school Spanish would not let me down (even though I graduated from high school twenty years ago). The man looked at me perplexed. Perhaps I needed to speak louder. “¿DÓNDE ESTA SU JUEGO?” Instead of asking the kind workman where his boss was, I interrogated him about his game. Epic fail. Thankfully, correcting a mistake you made on your tax return doesn’t have to be a traumatic experience that has the potential to haunt you for years and years to come.

Mistakes happen, and the IRS is aware of this. When a taxpayer makes an effort to file an honest and accurate return but still makes a mistake, the taxpayer can correct the mistake by filing an amended return. The time the IRS has to audit a filed tax return is called the statute of limitations. Generally, amending an already filed tax return will not extend the time the IRS has to audit the return, which is normally three years from the date the return was originally filed or due, whichever was later. Now, if you prepare and submit an amended return to the IRS within sixty days of the statute of limitations expiring and the amended return shows you owe additional tax, the IRS will have an additional sixty days starting on the day after the amended return was submitted to audit the return.

As with just about everything IRS-related, there are exceptions to the three-year rule. If more than twenty-five percent of your total income was missing from the originally filed return, then the IRS has six years to audit the return, even if you file an amended return and fix the error. For those who prefer to have coal in their stockings at Christmas and file a false or fraudulent return in an intentional attempt to evade tax, the statute of limitations never ends. This is true even if the person later files a true and honest income tax return down the road. Once someone files a tax return that the IRS views as fraudulent, there is no going back. The IRS may audit and assess additional tax at any time in the future.

For most folks, preparing their tax return is like ordering dim sum at a restaurant where all the menu items are written in Chinese, and the server only knows a handful of words in English. You give preparing the tax return the “good ole college try,” say a quick prayer, and hope for the best as you press the “submit” button to efile. But sometimes a decimal point is entered in the wrong place or your cat steps on your keyboard while you went to the kitchen to get a snack and the $100 in federal tax withholding you entered has turned into $1,000. It is good to know that an amended return can be filed to correct these unintentional errors and you will not have to worry about being left “on the hook” with Uncle Sam until the end of time. However, if your cat ever decides to do a number from Bring in ‘Da Noise, Bring in ‘Da Funk on your keyboard and you end up getting a letter from the IRS indicating that they suspect you filed a fraudulent return, help is just a phone call or a mouse-click away. The tax professionals at TaxAudit are here to stand beside you and help to resolve your tax conundrum with the IRS. Remember, taxes are a buffet of “lost in translation” rules and regulations. Making a mistake comes with the territory, but know that if you are doing your best, correcting those mistakes does not have to mean you will be looking over your shoulder into infinity.

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Jean Lee Scherkey, EA
Learning Content Developer

 

Jean Lee Scherkey began her career at TaxAudit in 2015, and her current title is Learning Content Developer. She became an Enrolled Agent in 2005. For several years, Jean owned a successful tax practice that specialized in individual, California and trust taxation, and assisting those impacted by tax identity theft. With over fifteen years of varied experience in the field of taxation, Jean has worked at different private tax firms as a Staff Practitioner, Tax Analyst, and Researcher. Before coming to TaxAudit, she worked over two years for TurboTax as an “Ask the Tax Expert.” In addition to her work in TaxAudit’s Learning and Development Department, Jean is actively involved in the company’s ENGAGE Volunteer Program, which provides opportunities for employees to help and serve the local community.  


 

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