If an audit notice lands in your mailbox, one of the first questions is simple: how far back can the IRS audit your returns? For most taxpayers the answer is three years from filing, but several exceptions stretch that window, a few remove the limit entirely, and California's Franchise Tax Board runs on its own clock. Knowing which rule applies frames everything that follows.
The general three-year rule
As a starting point, the IRS normally has three years from the date a return was filed to examine it and assess additional tax. This is the assessment statute of limitations. A return filed early is treated as filed on its original due date, so filing in February does not start the clock any sooner. For a typical return with ordinary wages, interest and deductions, the three-year window is the rule that governs.
If you have just opened an examination letter and want to understand your exposure, call (415) 754-0115 to schedule your free consultation, or send the details through our contact page and we will review the notice with you.
When the window opens to six years
The three-year period doubles to six years in a specific situation: a substantial omission of income. Under the Internal Revenue Code, if a return leaves out more than a quarter of the gross income it reports, the IRS has six years to assess. This often surfaces with unreported side income, overlooked investment proceeds, or a business that under-reported receipts.
Basis overstatements and foreign assets
The six-year window can also apply when the basis of an asset is overstated in a way that understates gain, and in certain situations involving unreported income from foreign financial assets. Separately, failing to file some required foreign information returns can keep a year open until the missing form is filed. These are technical areas, and the line between an honest mistake and a reportable omission is not always obvious from the notice itself.
How far back can the IRS audit with no time limit?
Two situations carry no statute of limitations at all. The first is a return that was never filed: until a return is filed, the clock never starts, so an unfiled year stays open indefinitely. A substitute return the IRS prepares on its own does not start the clock either. The second is a false or fraudulent return filed with intent to evade tax. Fraud is a high bar for the government to prove, but the absence of a filed return is easy to show.
Why the start date matters
Because the window runs from when a return is treated as filed, exact dates can decide whether a year is still open. A return filed on extension, a late return, or a year where the IRS prepared a substitute return each changes the math. An attorney can confirm which years are genuinely within reach before any documents change hands.
Reading your account transcripts
IRS account transcripts record the filing date, extensions, assessments and prior adjustments for each year. Under a power of attorney, an attorney can obtain them, read them alongside your notice, and identify whether the agency is reaching into a year that has already closed. Sometimes the strongest response to a proposed change is simply that the assessment period expired, and the transcript is what shows it.
Extending the clock by agreement
During an examination, the IRS sometimes asks a taxpayer to sign a consent extending the assessment period, typically when the statute is close to running. Signing is not automatic. The law requires the IRS to tell you that you may refuse the extension or limit it to particular issues or a particular period.
Fixed-date and open-ended consents
Form 872 extends the deadline to a specific date. Form 872-A is open-ended and stays in effect until either side formally ends it with a separate termination notice. The difference affects how long a year can remain exposed, and an attorney can review which form is being requested and whether its scope can be narrowed.
How the California FTB window compares
California has its own rules. The Franchise Tax Board generally has four years from the date a California return was filed to propose an assessment, one year longer than the basic federal period. California also ties itself to federal audits: when the IRS changes your federal return, state law requires you to report the change to the FTB, generally within six months of the final federal determination. If that report is never made, the FTB's window to act on the federal change can stay open much longer. Our guide to an FTB audit in California explains how a state examination unfolds.
Audits versus collection
The audit window is separate from the ten-year period the IRS has to collect a balance once it is assessed. A year can be closed for audit purposes yet still carry a collectible balance. If the concern is an existing balance rather than a new examination, our guide to the IRS 10-year collection statute explains how the collection clock works.
Help in the Tri-Valley and East Bay
The Somal Law Firm in Pleasanton represents individuals and small businesses across Dublin, Livermore, San Ramon, Danville and the wider East Bay in IRS disputes, audits and appeals. Attorney Bob Somal can review the notice, confirm which years are open, and deal with the examiner directly so you are not facing the agency alone. See the firm's practice areas, or read how an IRS audit lawyer in the East Bay handles a case from the first letter to an appeal.
Frequently asked questions
Does the three-year clock start when I file or when the return is due?
For a return filed on or before the due date, the period generally runs from the due date. For a late return, it generally runs from the date the return was actually filed. Filing early does not shorten the period.
Can the IRS audit a year I never filed?
Yes. Because the statute of limitations does not begin until a return is filed, an unfiled year remains open indefinitely, and an IRS substitute return does not start the clock.
Do I have to sign a form extending the audit period?
No. The IRS must tell you that you can refuse or limit an extension. Refusing can have its own consequences, such as the IRS issuing a notice of deficiency sooner, so an attorney can review the request in light of your situation.
Can California audit a year the IRS can no longer touch?
It can happen. The FTB's basic window is longer than the federal one, and an unreported federal change can keep a California year open even longer.
If you have questions about how far back the IRS or the FTB can reach on your returns, call (415) 754-0115 to schedule your free consultation. When you get in touch, we will look at your notices and transcripts, explain which years are still open, and walk through your options. You can also reach us through our contact page.
Attorney Advertising. This article is general legal information for Bay Area residents, not legal advice, and does not create an attorney–client relationship. Every situation is different — please consult a licensed attorney about your specific circumstances.