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Factors that may determine the timeline for an audit

Generally speaking, the IRS can audit tax returns sent in by Georgia residents and others for three years. However, there are scenarios in which the government could have twice as much time to inquire about a return. If someone commits an especially egregious violation of the tax code, there may be no statute of limitations imposed on the IRS. The federal government typically has six years to audit a return if a person fails to disclose more than 25% of his or her income.

The same is true for those who significantly underreport the tax basis of an item sold during a tax year. This is in spite of the fact that the Supreme Court ruled that the government should only have three years to intervene in such a scenario. However, a law was passed extending the timeline for an audit to six years in such cases.

Generally speaking, a statute of limitations doesn't apply if a return is altered or sent in without a signature. This is because the IRS doesn't accept a return under such conditions. As a return was never formally sent to the IRS, the audit clock does not start to run. Those who are contacted by the IRS are encouraged to review the notice carefully before responding. It may be possible to speak with a tax professional prior to doing so.

Those who are involved in an IRS tax dispute may benefit from seeking the advice of an attorney or an enrolled agent. Doing so might make it possible to respond to an IRS notice in a timely and adequate manner. It may also make it easier to limit the duration and scope of a potential audit. If necessary, an attorney might negotiate directly with the IRS on a taxpayer's behalf.

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