Taxpayers dealing with the IRS have the right to finality when going through an audit. Taxpayers have the right to know when the IRS has completed the audit. This is one of the ten basic rights owed to taxpayers, collectively known as the Taxpayer Bill of Rights. Here’s what these taxpayers need to know:
1. The maximum about of time they have to challenge the IRS’s position
The IRS has three years from the date taxpayers file their returns to assess any additional tax for that tax year.
If a taxpayer fails to file or files fraudulent returns, the IRS will then have unlimited time to assess owed taxes for that year.
2. The maximum amount of time the IRS has to audit a particular tax year or collect a tax debt
From the date of assessment, the IRS has 10 years to collect unpaid taxes. This can be extended only for taxpayers that enter installment agreements or if the IRS obtains court judgements.
The IRS can suspend this 10-year collection when they cannot collect money due to the taxpayer’s bankruptcy or if the taxpayer is part of an ongoing collection due process proceeding.
3. When the IRS has finished an audit
A statutory notice of deficiency is a letter proposing additional tax the taxpayer owes. This notice must include the deadline for filing a petition with the tax court to challenge the amount proposed.
Taxpayers usually will only be audited once per tax year but previous audits can be reopened if there is fraudulent information filed on the taxpayer’s return.
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