How Long Does an IRS Audit Take?

How Long Does an IRS Audit Take?

How long an IRS audit takes can vary, but there are guidelines in the IRS Manual. These state that IRS audits of individual tax returns should be completed within 26 months of the due date of the tax return or the date the return was filed, whichever is later. For business returns, the period is 27 months. However, there are exceptions as discussed in this post. Importantly, retaining a tax attorney can help ensure that audits are resolved as quickly and efficiently as possible.

What Factors May Affect the Length of an IRS Audit?

The length of an audit depends on factors such as the type and complexity of the audit, the availability of the information requested, the availability of both parties for scheduling meetings, and whether the taxpayer agrees with the IRS’ findings.

Generally, correspondence examinations which are conducted through the mail take the least amount of time. They may be completed in a few months, especially if all issues can be addressed in one response letter.

Service center (or office) examinations which occur in the IRS office closest to the taxpayer’s residence also can be handled in a few months if complete information is provided promptly and there are no disputes.

Field examinations which are conducted at the taxpayer’s home, place of business, or accountant’s office take the longest because they involve a more extensive review of records. They can take a year or more.

Note that these are general guidelines and individual cases will vary.

The IRS must complete the audit and take action to assess any additional taxes, penalties, and interest before the statute of limitations expires, which is three years in most cases. That period starts to run on the original due date of the return or the date of filing, whichever is later. However, the IRS can ask you to agree to an extension of the statute of limitations. You are not required to agree to this, but if you don’t, then the IRS will render a decision about what you owe based on the information it has at that time, which may not be favorable to you.

How Can You Speed Up the Conclusion of an IRS Audit?

The fastest way to end an audit is to provide clear and complete information. This is where good recordkeeping practices can make a significant difference. It’s important to understand what records you need to retain and for how long so you have proof to substantiate your tax return.

You also must respond to IRS notices in a timely manner. There are numerous deadlines during the audit process and if you fail to comply, you may lose your right to challenge the IRS’ actions.

Finally, hire a tax attorney with experience dealing with IRS audits. Such an individual can help you prepare and present documents, determine the best strategy for resolving your matter and advocate for your interests while expediting your matter.

Audits are stressful and can be complicated to handle on your own. If you have a tax problem, contact one of our tax lawyers to learn how we can help.