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How long does it take the IRS to audit a tax return?

Generally, the answer is between one and three years. In 2018, the IRS expected to receive 153 million individual tax returns. It takes time to go through all of them. 

There are a couple ways that your tax return might be singled out for more attention. Random selection using a statistical formula is one. The IRS then compares a flagged return against “norms.” Computer screening is another used to cross reference information on your return with third party information. If a business partner or investor is under audit, you might also be next.

Will an IRS agent come knocking at the door?

No, and most audits can be completed through the mail. You may be able to resolve a correspondence audit by sending in additional information that supports business deductions or stated income. If a third party made a mistake, such as transposing numbers on a 1099, this is often when you can correct it.

Even when the IRS requests an in-person interview, it will initially contact your through the mail. The IRS revenue agent will then schedule a meeting to look through certain documents and records.

While sometimes a mistake means the IRS owes you a refund, in most cases the IRS believes you owe more than you paid. Most tax audits lead to assessments and penalties. It is thus wise to seek legal counsel and representation before responding.

What are the limits on how far back the IRS can look?

In most cases, it cannot look back more than three years. For substantial errors and unfiled tax returns this extends to six years.

A good rule of thumb is to keep important tax-related documents for six years before taking them to the shredder.

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