Many taxpayers believe that the IRS operates with impunity, but even the IRS has limits. Some of the limits, such as limits on how many years it can assess additional tax, benefit taxpayers, whereas others have the opposite effect. If you have delayed in filing your tax returns, there are a few things you need to know that are bound to light a fire under you.
Statute of Limitations
The IRS's statute of limitations is the period of time during which the IRS has to resolve tax issues. By law, you only have three years from the date your return was filed to file an amendment and claim a refund. Additionally, you are only allowed three years from the due date of your return to file and claim a refund. Once the statute of limitations has expired, the money that would’ve been refunded to you is deposited into the IRS’s “excess collections” account.
Calculating Statute of Limitations
If you filed a return, then you have three years from the date of the return to file an amended return and claim your refund. The date on which you filed your return is the date you mailed your tax return, so you’ll need proof of timely mailing. In cases where you do not have proof -- such as a FedEx receipt -- then the statute of limitations begins on the date the IRS received your return. If you did not file a return or if you filed an early return, then the statute of limitations begins on April 15. For example, if you filed your return or February 15 or if you did not file, the statute of limitations begins on April 15.
If you have proof that the IRS received and lost your return within the statute of limitations, meaning you have proof someone at the IRS signed for your return, then you are still within the statute of limitations. It is up to the IRS to decide the best way to proceed since it is responsible for losing the return. If, however, the return is lost in the mail, you’re out of luck.
The three-year tax rule also works in reverse. The IRS only has three years from the date of your original return filing to assess you additional tax, after which time the statute of limitations expires. If the IRS deems it necessary, it can contact you and request that you extend the three-year statute of limitations. It is then up to you to decide whether to allow the extension and how best to negotiate the terms of the extension.
- Cornell University Law School: U.S. Code Section 7502. Timely Mailing Treated As Timely Filing and Paying
- "Forbes"; What Triggers IRS Statute of Limitations?; Robert W. Wood; February 2011
- IRS.gov; Chapter 11 -- Statute of Limitations; John Pruitt and John Mossman
- IRS.gov; Help Yourself by Filing Past Due Returns; January 2008
Denise Caldwell is a finance writer who has been writing on taxation and finance since 2006. Her articles appear regularly on websites such as Gomestic.com and MoneyNing.com. She has taken what she learned while working at the IRS to provide readers with helpful tax and finance tips. Caldwell received a Bachelor of Arts in political science from Howard University.