How long does the IRS have legally to address unreported income?

Asked about 1 year ago - Accokeek, MD

I have read a lot of articles about income tax evasion. I know the IRS can audit someone for 3 years and up to 5 years if the unreported income is over 25% of the reported income. But when I read the person has "admitted to unreported income from years 2003-2008", was the IRS able to prosecute that income or is it just admitted in the statement of facts when the individual accepts the plea?

Attorney answers (6)

  1. Gregory David Verdibello

    Contributor Level 10

    11

    Lawyers agree

    Answered . The statute of limitations for the IRS to "assess" a tax against a taxpayer is three years from the due date of the return or the date the return is filed (whichever is later). The IRS has six years to assess a tax against a taxpayer if there is a 25% omission of income. The statute of limitations does not begin to run if a taxpayer does not file a return or if there is fraud associated with the return, which means the IRS has forever to assess the tax.

    This material does not constitute tax, legal or accounting advice. It was not intended or written for use and... more
  2. Evan A Nielsen

    Contributor Level 18

    10

    Lawyers agree

    Answered . Fraud is always something the IRS can pursue.

    Evan A. Nielsen is licensed to practice law in California and handles federal tax matters throughout the U.S. The... more
  3. Raymond George Wigell

    Pro

    Contributor Level 19

    6

    Lawyers agree

    Answered . No time limit on charging i.e. criminal liability, re unreported income. Civil liability has limits.

    Of course, every answer is based on the question asked and requires a more complete context. This answer should... more
  4. Stephen F Wallace

    Contributor Level 19

    5

    Lawyers agree

    Answered . If you are talking about a plea and the factual basis for the underlying prosecution, this may or may not have any implication upon sentencing outside of the SOL. Now this certainly goes to sentencing factors for relevant conduct. There is a lot of depth to your question.

  5. Glenn Michael Anderson

    Pro

    Contributor Level 3

    2

    Lawyers agree

    Answered . The IRS generally has 3 years to assess taxes from the later of when the return is filed or when the tax return is due. If no return if filed, there is no statute of limitations. If a return is filed and there is a substantial understatement of income, the IRS has 6 years to assess taxes from the later of when the return is filed or when the tax return is due.

  6. William J. Neild

    Contributor Level 3

    2

    Lawyers agree

    Answered . The general statute of limitations for criminal purposes is six years for federal tax crimes. State laws vary. For civil purposes there is no statute of limitations if the IRS can establish fraud. If there is a criminal conviction for tax evasion the IRS can use the conviction as "collateral estoppel" as to the fraud on the civil side. The taxpayer can still dispute the civil numbers after a conviction but he or she will be unable to contest the fraud element and that means the statute of limitations for assessing the liability is open.

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