Statute of Limitations | Back Taxes

What are the IRS statute of limitations on back taxes or unfiled tax returns? The principal time limitations associated with the IRS audit of tax returns are these:  if no return has been filed or if the return is fraudulent, there is no statute of limitations.  Once a return has been filed the government normally has three years in which to assess a deficiency. If there is a 25% omission of income on a filed return, the three year period is extended to six years.

In the collection area IRS has 10 years from the time of assessment to collect. The ten-year period is extended by the pendency of bankruptcy, offer in compromise and collection due process proceedings.  It is also extended by a payment agreement.

California has no statute of limitations on collection of taxes. Other states vary.

Careful analysis and understanding of the statutes of limitations is important both in audit and collection cases.