The General Rule: Three Years
The IRS generally has three years from the date you file your return to assess additional tax. This is the assessment statute expiration date, or ASED. After the ASED expires, the IRS cannot propose additional tax for that year. It is a hard cutoff.
The clock starts on the later of the due date of the return or the date you actually filed. If you filed your 2023 return on February 15, 2024, the ASED still runs from April 15, 2024, because that was the due date.
The Six-Year Exception
If you underreported your gross income by more than 25 percent, the IRS gets six years instead of three. This is a trap that catches a lot of people. If you had $200,000 in income and only reported $140,000, the IRS has six years to catch it. The 25 percent threshold is based on gross income, not taxable income, which makes it easier for the IRS to trigger.
No Statute of Limitations
There is no statute of limitations in three situations. If you filed a fraudulent return with the intent to evade tax, the IRS can audit you forever. If you did not file a return at all, there is no statute because the clock never started. And if you failed to report certain foreign financial information, the statute may not begin to run.
Extending the Statute
The IRS can ask you to sign a consent to extend the statute using Form 872 or Form 872-A. This is common during audits when the IRS needs more time. You are not required to sign, but refusing can result in the IRS issuing a deficiency notice based on incomplete information. A tax attorney advises you on whether to sign and how to limit the scope of the extension.