IRS Tax Limitations are up to Interpretation
Posted by Kim Perkins on July 26th, 2011
The IRS is quite specific in terms of how long records must be kept. IRS Publication states, “You must keep your records as long as they may be needed for the administration of any provision of the Internal Revenue Code.” Your records are your responsibility. Loss or disposal of your records may be detrimental to your position should the IRS enact an audit or a judgement against you.
However, there is a time limit which favors both the IRS and the taxpayer: the Period of Limitations.
If You:
1) Owe no additional tax and (2), (3), and (4) below do not apply to you the limit is three years.
2) Do not report income that you should and the income is more than 25% of your gross reported income shown on your return the limit is six years.
3) File a fraudulent return there is no limit.
4) Do not file a return, there is no limit.
5) File a claim for a refund or a credit after you have filed a return the limit is either 2 years from when you paid the tax or three years from when you filed the return, whichever is greater.
6) File a claim for a loss from worthless securities, the limit is seven years.
The Period of Limitations is subject to filing dates and interpretations of the Internal Revenue Code.
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