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The IRS's statute of limitations

Tax payers in Massachusetts may be interested in a recent article discussing how far back the IRS can go when attempting to charge a taxpayer with fraud or tax evasion. The answer depends on a few factors, and can range from three years to an unlimited amount of time.

The general statute of limitations on how long the IRS has to audit a taxpayer is three years. This is extended to six years in cases where more than 25 percent of income is omitted from a tax return. These time limits, however, can be extended by statute or by voluntary agreement if the IRS requests that a form granting them extra time be signed by the taxpayer.

In cases of failure to file or filing a return with under-reported income, the statute of limitations is six years. These cases can include criminal charges as well. The statute of limitations begins running either when the under-reporting return is filed or when the willful failure to file occurs. This time can be extended, or tolled, by not including the times when the taxpayer is out of the country or if the person in question has be declared a fugitive. Additionally, there is no statute of limitations for civil tax fraud, though after a long enough time period it is difficult for the IRS to produce the necessary proof.

Mistakes on tax claims can result both civil and criminal penalties. An attorney who has experience in cases of alleged tax evasion may be able to help investigate a client's tax returns and other evidence, as well as provide representation when dealing with the IRS.

Source: Forbes, "How Far Back Can IRS Claim Tax Evasion Or Fraud? Timing Is Everything", Robert W. Wood, October 13, 2013

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