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10 Myths About IRS Audits

        Money | Taxes

3
Audits Are Always Done Immediately
A sign states the business hours in the James A. Farley post office in Manhattan, which is staying open until midnight on the last day to file taxes, April 15, 2014. Spencer Platt/Getty Images
A sign states the business hours in the James A. Farley post office in Manhattan, which is staying open until midnight on the last day to file taxes, April 15, 2014. Spencer Platt/Getty Images

Think again. The auditing process typically begins three to four months after the filing deadline.

Also, in most cases the IRS has up to three years to conduct an audit with the majority of them occurring in the latter two years. Simply put, it takes a while for the IRS to review millions of documents. If the IRS shows up after this point, you can quote the statute of limitation [source: Wood].

However, there are exceptions to this rule which we've listed below:

  • The three-year limitation is doubled to six if you omitted more than 25 percent of your income.
  • It's also doubled if you omitted more than $5,000 of foreign income.
  • The IRS has no time limit if you never file a return.
  • There's no time limit on fraud.
  • There's no time limit if you fail to claim foreign assets.

There are also some other complications. For example, your state may be running on its own clock on limitations. In California, for instance, the typical statute of limitations is four years [source: Wood].


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