Two hands, each from a different person, pulling at a single dollar.The Internal Revenue Service (IRS) plays a pivotal role in collecting taxes to fund essential government functions. As taxpayers, we have the responsibility to accurately report our income and pay taxes on time. However, life’s complexities sometimes lead to errors or omissions on tax returns, resulting in back taxes owed to the IRS. A common question that arises is how far back the IRS can reach to collect these unpaid taxes. In this essay, we will explore the statute of limitations for collecting back taxes, the factors that influence this timeframe, and the steps taxpayers can take to address and resolve back tax issues.

The IRS can usually go back three years to audit. However, this can be extended to six years, and in some cases, there can be no time limit at all, meaning that the IRS can go back indefinitely.

An IRS audit is a serious matter, and you should contact a tax defense law firm such as Ronald Arthur Stearns Sr. PLLC as soon as possible. The sooner, the better, as we will get right to work to investigate your case and explore all possible defenses.

Utilizing over 26 years of experience and in-depth knowledge of tax laws, we will strive for the best possible resolution in your case. Whether your case involves civil or criminal proceedings, we can help protect your rights and your future.

If you have received an IRS audit letter, do not hesitate to contact our office at 210-853-2135.

Statute of Limitations: The Three-Year Audit

Typically the IRS can only go back three years after you file your tax return; this is in line with the federal tax statute of limitations.

The statute of limitations refers to the time limit within which the IRS can legally initiate collection actions for unpaid taxes. This time limit is defined by federal law and serves as a safeguard against excessive collection efforts for old tax liabilities. Generally, the statute of limitations for collecting back taxes is ten years from the date the tax was assessed. This means that the IRS has a window of ten years to take collection actions, which can include wage garnishment, bank levies, and property seizures, to recover unpaid taxes.

It is worth noting that if you file early, before April 15th, then the three years will still be three years before the due date and not the filing date. However, if you apply for and receive an extension for your tax return, which could be up to six months after the original due date, the three years will begin from the new filing date. On the other hand, if you did not file an extension but filed late then the three years will start from the late filing date.

Factors Influencing the Statute of Limitations

While the general statute of limitations for collecting back taxes is ten years, certain factors can influence this timeframe. Understanding these factors can provide insights into the complexities of tax collection:

  1. Unfiled Returns: If a taxpayer fails to file a tax return, there is no statute of limitations on the IRS’s ability to assess and collect the taxes owed. In other words, the IRS can pursue collection indefinitely until the tax return is filed.
  2. Fraudulent Returns: In cases of tax fraud or willful evasion, the statute of limitations does not apply. The IRS can initiate collection efforts at any time, even after the ten-year window has passed.
  3. Bankruptcy: If a taxpayer files for bankruptcy, the statute of limitations is temporarily suspended during the bankruptcy proceedings. Once the bankruptcy case is resolved, the statute of limitations resumes.
  4. Installment Agreements and Offers in Compromise: If a taxpayer enters into an installment agreement or an Offer in Compromise with the IRS, the statute of limitations is extended for the duration of the agreement or the time it takes for the IRS to review the offer.

The Six-Year Audit

Although the IRS can usually only go back three years to collect back taxes, there are exceptions. The IRS may extend the time to six years if:

  • Unreported foreign income of $5,000 or more, including inheritances or offshore accounts.
  • Your tax return indicates a significant understatement of income, usually 25% or more of your gross income.
  • The IRS determines that certain items on your tax return are understated by 25% or more.
  • If all the appropriate forms relating to gifts, assets, foreign income, and inheritances were not filed.

No Time Limit Audit

In some rare circumstances, the IRS can go back as far as they want to collect taxes owed. No statute of limitations may apply if:

  • You do not file a tax return at all.
  • You do not file a valid tax return, i.e., you didn’t sign it.
  • You file a fraudulent return, such as using a fake social security number, failing to fully report your income, claiming business expenses as personal expenses, or falsely claiming deductions.

Why You Might Be Subject to an IRS Tax Audit

IRS audits can take place randomly. However, the IRS does always look for probable cause, such as:

  • Under-Reported Income – The IRS will often take figures at face value. However, they do have automatic checks in place to check that reported income is in line with real earnings.
  • Claiming Tax Relief When You Are Ineligible – If you claim tax relief when you are not eligible, then this could be considered tax fraud.
  • Misreported Foreign Income – Foreign income and assets can make tax returns complex. If anything has been misreported, then this could trigger an IRS tax audit.
  • Large Deductions – If your business deductions are noticeably higher than others in the same industry, then it could be cause for the IRS to investigate.
  • Business Losses – If your business has lost money for multiple tax years, then the IRS could question how you have maintained the business.
  • Something Doesn’t Add Up – Tax returns are complex, and if something doesn’t add up, then this could be sufficient to trigger an IRS audit. That is why most people seek tax advice when filing their returns.

What to do if You Receive an IRS Tax Audit Notification

If you receive a tax audit notification from the IRS, then you should contact a tax defense lawyer as soon as possible. If you don’t believe you have done anything wrong, then you may just need to provide some further information. However, an attorney can help make sure that everything runs smoothly and that your rights are protected.

If you are unsure as to whether you have filed anything incorrectly, then it is essential that you are upfront and honest with your representation. You are protected by the attorney-client relationship, which means that you can be entirely honest, and your attorney can use the information you provide them with to develop the best possible defense in your case.

Your next steps may depend on what type of audit you are facing:

Field Audit

Field audits involve an IRS agent visiting a home or business. These cases must be taken seriously, and it is highly advisable that you reach out to an experienced tax attorney.

If you are facing a field audit, then it is possible to request that the audit take place at the office of your tax attorney or your local IRS office instead of your home or business, which could give you more control of the situation. However, it is not always the best option as it could suggest that you have something to hide.

Office Audit

An office audit will require individuals to visit their local IRS office so that the IRS agent can inspect paperwork and other records in search of inconsistencies. The examiner will be looking for evidence to support a theory, and so these cases can be particularly stressful and worrying.

Fortunately, you can request that your tax defense attorney accompanies you to the office, and this is highly recommended. They will help to explain errors and will ensure that your IRS agent adheres to tax law and treats you fairly.

Correspondence Audit

Correspondence audits are usually the easiest to handle as they can often be resolved by providing further information. Often clarification can be achieved via email.

Potential Outcomes of an IRS Tax Audit

Your tax defense attorney can tell you what to expect from your tax audit, depending on your specific circumstances. Although no two cases are the same, there are some typical patterns that your attorney will look for.

The more time your attorney has to assess your case, the better chance they have at formulating a successful defense.

Some common penalties that the IRS may issue include:

Tax Court

If you are found to have committed tax fraud or tax evasion, then it is possible that the IRS will open civil or criminal proceedings. In these cases, an experienced federal tax attorney is essential. At Ronald Arthur Stearns Sr. PLLC, our attorneys are experienced litigators and will advocate on your behalf in court if necessary.

A Settlement

If you are found not to have underpaid your tax liability but are not at fault, then your tax lawyer may be able to negotiate a settlement to reduce the amount you owe.

Civil Liability

IRS agents are under no obligation to negotiate, and you may still be required to pay your tax liability in full. If you are ordered to pay your obligation in full, then your attorney may be able to appeal the decision or help you work out a payment plan.

No Further Action

An experienced attorney may fight to have your IRS audit dismissed entirely. That means no further action or payment will be required. This is not always possible, but having representation will ensure that every possible defense is explored

Addressing and Resolving Back Tax Issues

When facing back tax issues, it’s crucial for taxpayers to address and resolve the matter proactively. Ignoring back taxes can lead to serious consequences, including collection actions and penalties. Here are steps taxpayers can take:

  1. File Outstanding Returns: If you have unfiled tax returns, the first step is to file them as soon as possible. Filing the returns initiates the statute of limitations and allows you to move forward with addressing the tax liability.
  2. Assess Your Options: Depending on your financial situation, you may have various options for addressing back taxes. These options include setting up an installment agreement, making an Offer in Compromise, or seeking Currently Not Collectible (CNC) status if you are facing financial hardship.
  3. Consult a Tax Attorney: Dealing with back tax issues can be complex, especially if you’re navigating different options and negotiating with the IRS. Consulting a tax attorney can provide valuable guidance and help you choose the best course of action.
  4. Stay Informed: Understanding your rights and the available avenues for resolving back tax issues is essential. The Taxpayer Bill of Rights outlines your rights as a taxpayer, including the right to appeal IRS decisions and the right to be treated fairly.


Accuracy is important when filing your tax return as the penalties for a substantial error following IRS audits can be severe, including fines and even criminal charges. The best way to ensure accuracy is to seek the help of a tax attorney to help you file. At Ronald Arthur Stearns Sr. PLLC, we also help people file tax returns and will help ensure that you do so lawfully and accurately while minimizing your tax obligations.

The best way to get an accuracy-related penalty abated is to seek the help of an experienced tax defense lawyer who can assess all the possible defenses to your case.

If you are facing IRS penalties, then you do have the option of trying to handle it on your own. However, tax law is extremely complex, and so it is advisable to seek the help of an experienced attorney who can assess the risk associated with your case and explore all possible defenses.

Although criminal tax evasion charges are rare, they are possible. People found to be guilty of tax evasion could face hefty fines and a jail sentence of up to five years.

You have a right to appeal IRS penalties. To do so, you must file an official protection within 30 days of receiving your letter from the IRS. Your tax defense attorney will help you to present your defense and negotiate a solution.

The cost of your tax defense lawyer will depend on the complexity of your case and whether it needs to be presented in court. When you contact Ronald Arthur Stearns Sr. PLLC, we will give you an idea of what representation will cost you so that you can make an informed choice.

If you can’t afford to pay the IRS what you owe, then you should contact a tax defense law firm to explore your options. An attorney may be able to reduce what you owe or help you negotiate a payment plan.

Contact Ronald Arthur Stearns Sr. PLLC Today

An IRS audit is a serious matter, and even if you believe you have done nothing wrong, seeking the advice of an experienced tax defense attorney could be the most important decision you ever make.

At Ronald Arthur Stearns Sr. PLLC, we boast over 26 years of experience helping people in Texas navigate tax matters. We have an in-depth understanding of tax laws and will fight tirelessly to protect you.

The IRS is comprised of skilled individuals who will look to exploit any errors. We believe that you deserve representation from someone with similar knowledge of the tax system so that you can explore every possible option available to you.

Whether your case involves simple mistakes or challenging errors, we will fight to secure the best possible outcome. We are experienced in representing clients in both civil and criminal courts, so no matter what route your case takes, we will be prepared to help.

Contact Ronald Arthur Stearns Sr. PLLC now at 210-853-2135, and one of our attorneys will get to work quickly to develop your defense.