The IRS can adjust your tax return and assess taxes against you, but generally, only for three years after you file. This deadline is called the assessment statute expiration date (ASED), but the clock only starts if you file a return. If you have unfiled returns, the IRS can assess tax against you anytime.
This guide explores the details of the ASED and briefly examines other IRS statute deadlines. This blog does not constitute legal advice, and if you would like to speak with a tax attorney, contact us at Wiggam Law today. We can help you with tax audits, assessments, back taxes, and all other tax problems and concerns.
How Long Does the IRS Have to Assess Taxes?
The IRS has three years from the letter of the filing deadline or the day you file your tax return to assess additional taxes, but there are a few exceptions to the rule. In particular, if you underreport your income by 25% or more, the IRS has six years to assess additional taxes. There is no deadline if you file a fraudulent return.
Here’s an example. Say your 2024 income tax return is due on April 15, 2025. You file early on February 1, 2025. The assessment deadline is three years after the due date, which means the IRS has until April 15, 2028, to assess tax on that return.
Say, however, that you filed a year late on April 15, 2026. The agency has until April 15, 2029, to assess tax against you.
What if you only reported $60,000 of your $100,000 income? In that case, since you reported less than 75% of your income, the agency has six years to assess tax. If the return was fraudulent, there is no assessment deadline. The agency has unlimited time.
What Is the Assessment Statute Expiration Date?
The Assessment Statute Expiration Date (ASED) is the last date the IRS can assess taxes on a return that has already been filed. There is no ASED on unfiled or fraudulent returns.
How to Determine the ASED
To determine the ASED, you need to know the date you filed and the due date for the return. Then, identify which date was later and add three years. You can set up an online IRS account if you’re unsure when you filed. Then, from the home page, select tax records and request a transcript for the tax return for which you want to see the ASED. You should see the received date near the middle of the first page.
What if You Amend a Tax Return?
If you amend your tax return, the IRS still only has three years from the original due date or filing deadline to assess tax. However, if you file after the original ASED or 60 or fewer days before the ASED, the IRS gets 60 days to assess tax on that return.
To illustrate, imagine that you filed a 2023 tax return on April 15, 2024. The ASED is three years later, on April 15, 2027. However, on April 1, 2027, you amend your return for a refund. Because it is 60 or fewer days before the original ASED, the IRS now has 60 days from the date you amended to assess tax against you.
How Long Do You Have to Amend a Tax Return?
You can amend tax returns indefinitely for some issues, but if you want to request a refund, you only have three years from the original deadline. The Refund Statute Expiration Date is typically the same as the ASED.
However, under the refund statute, you also have two years from the date you pay to request a refund. In that case, you can only request a refund of those specific taxes paid, not all the taxes reported on the return.
How Long Does the IRS Have to Audit Your Return?
The IRS has three years to audit your tax return, but if you report less than 75% of your income or file a fraudulent return, the agency has six years or an unlimited time frame, respectively. The audit deadline is technically called the assessment statute expiration date.
How Does an Audit Affect the Assessment Deadline?
If the IRS starts an audit close to the deadline, they will ask you to extend the deadline so that they can complete the audit. Before agreeing to that, you may want to talk with a tax attorney to ensure this is the best option in your situation.
Be aware, however, that refusing to extend the deadline will not necessarily get you through the process faster. If you don’t agree to extend, the auditor will typically rush through the audit and assess tax before the deadline. Then, they will send you a Notice of Deficiency, which by law pauses the time clock for the assessment statute of limitations.
When you receive the notice, you can appeal and go through the Tax Court or pay under protest and request a refund. Both of these processes can be very confusing. They also have strict deadlines which cannot be missed. For some taxpayers, extending the ASED and going through the audit is easier, but again, you should consult with a tax professional about your situation.
How a Notice of Deficiency Affects the ASED
As noted above, the IRS may send you a Notice of Deficiency if it reviews/audits your return and decides to assess tax against you. The assessment time clock gets paused when the IRS sends this notice, and it stays paused until the deadline on the letter, which is 90 days if you’re in the country and 150 days if you’re out of the country. If you don’t respond within that time frame, the assessment will become final, and the time clock will start running again.
However, if you appeal, the time clock will stay paused until the Tax Court makes a decision on your case. For example, let’s say the IRS has 100 days left until the ASED, and it sends you a 90-day letter. You appeal, and several months later, the Tax Court makes a decision. Now, the IRS has 160 days until the ASED. That’s the 100 days they had left when the clock was paused, plus the 60 days that were added on.
You may also receive this same type of notice if the IRS issues a Substitute for Return because you haven’t filed a tax return.
Unfiled Returns, Substitute for Returns, and the ASED
If you don’t file a tax return, the timer for the assessment deadline never starts. In this situation, the IRS may issue a substitute for return (SFR), but the SFR also does not start the time clock.
The agency may send you a Notice of Deficiency to alert you about taxes being assessed due to the SFR. As explained above, you have the right to appeal, but in this case, the clock for assessment still does not start. In other words, the IRS could adjust that SFR and assess additional tax at any point.
To start the time clock, you must file a tax return. Talk with a tax professional to see if this is the best or even a necessary option in your situation. Often, SFRs overstate your tax liability, but if you’re pursuing a settlement, you may not need to spend the time refiling.
Other IRS Deadlines – Collection Statute Expiration Date
The other statute expiration deadline that is important to know when you have back taxes is the collection statute expiration date. The CSED determines how long the IRS has to collect taxes. This deadline is 10 years after the taxes are assessed. Again, if you don’t file a return and the taxes are never assessed, the CSED never starts.
The CSED gets paused for a lot more situations than the ASED. Essentially, any time you apply for a payment plan or any other type of IRS tax relief, the collection time clock will stop while the IRS reviews your application, but the IRS will get the extra time to collect added to the deadline.
Get Guidance With Tax Problems
Dealing with state and federal tax problems can be a nightmare, but with the proper guidance, you can put your tax problems behind you. At Wiggam Law, we specialize in helping individuals and businesses solve all kinds of tax problems. Whether you have back taxes, unfiled returns, or criminal tax concerns, we can help. Schedule your consultation online or call us at (404) 233-9800.