One IRS tax question that causes a lot of concern is: “How many years back can the IRS audit me?”

The answer isn’t always as simple as “three years.” While three years is the general rule for many federal tax returns, there are important exceptions that can give the IRS additional time to assess taxes.

Understanding these time limits can help you keep the right records and respond appropriately if you receive an IRS notice.

How Many Years Back Can the IRS Audit You?

Generally, the IRS can include tax returns filed within the last three years in an audit. If the IRS identifies a substantial error, it may add additional years. The IRS generally does not go back more than six years for an audit.

The three-year period is also connected to the IRS’s general statute of limitations for assessing additional tax. Generally, the IRS has three years after a return is due or filed, whichever is later, to assess additional tax.

However, there are situations where the IRS can go further back.

When Can the IRS Go Back Six Years?

One important exception involves substantially underreported income.

If you fail to report more than 25% of the gross income that should have been reported on your tax return, the assessment period can generally increase from three years to six years.

This is one reason accurate reporting is so important. Income from multiple jobs, investments, rental properties, businesses, or other sources should be carefully reviewed before filing your return.

Can the IRS Audit You After Six Years?

In certain situations, yes.

If a taxpayer files a fraudulent tax return with the intent to evade tax, there is no standard three- or six-year limitation on the IRS’s ability to assess the tax. Similarly, if a taxpayer doesn’t file a valid return, the normal three-year assessment period may not begin.

These situations are different from an ordinary tax return containing an innocent mistake.

How Long Should You Keep Tax Records?

A common question is: “How long should I keep my tax documents?”

The IRS generally recommends keeping records that support items reported on your return until the period of limitations for that return expires. For many taxpayers, that means at least three years, but certain situations require keeping records longer.

Important documents can include:

• Filed federal and state tax returns
• W-2s and 1099s
• Receipts supporting deductions
• Business income and expense records
• Investment statements
• Property purchase and sale documents
• Charitable contribution records
• Documentation supporting tax credits

Property records deserve special attention. The IRS recommends keeping records relating to property until the period of limitations expires for the year in which you dispose of the property in a taxable transaction.

What If You Receive an IRS Audit Notice?

Don’t ignore it.

An IRS audit notice typically explains what the IRS is reviewing and what information it needs from you. The IRS emphasizes the importance of responding by the deadline listed in the notice. Failing to respond can result in the IRS completing the examination using the information available to it.

If you’re unsure what documents to provide or how to respond, consider getting professional assistance before sending information to the IRS.

An Audit Doesn’t Always Mean You Did Something Wrong

Receiving an IRS notice can be stressful, but an audit does not automatically mean that the IRS believes you intentionally did something wrong.

The IRS may select a return for examination for a variety of reasons, including information that doesn’t match its records or items on the return that require additional review.

The most important steps are to stay organized, read the notice carefully, meet the deadline, and understand what the IRS is asking for.

What Happens After an IRS Audit?

An audit can result in no changes, an agreement with the IRS’s proposed changes, or a disagreement that may lead to additional steps.

Taxpayers have rights throughout the process, including the right to know the maximum amount of time the IRS has to audit a particular tax year and the right to finality regarding tax matters.

If additional tax is assessed, that’s different from how long the IRS can collect an existing tax debt. Generally, the IRS has 10 years from the date of assessment to collect a federal tax debt, although certain circumstances can suspend or extend that period.

The Bottom Line

So, how far back can the IRS audit you?

For many taxpayers, the general rule is three years, but substantial underreporting can extend the period to six years, and certain situations—such as fraud or failing to file a valid return—can result in much longer or unlimited assessment periods.

Keeping accurate records and addressing IRS correspondence promptly can make a significant difference.

At AIM Financial, we believe good tax planning doesn’t end when your return is filed. Proper recordkeeping, accurate reporting, and proactive tax guidance can help you stay prepared throughout the year.

Have questions about an IRS notice, audit, or your tax records? Contact AIM Financial to discuss your situation with a qualified tax professional.