Should you allow the IRS to ask for a waiver of the statute of limitations in an IRS audit and should you sign the associated forms? This is a complex question, and if you are not represented by an attorney in the audit this is potentially a trap for the IRS to expand the scope of the audit and increase the amount of tax you will owe. In other cases it is in our client’s interest to allow the IRS a waiver of the statute of limitations during an IRS audit to increase our leverage and the ability to gain a better result upon appeal at the conclusion of the audit. How will you know the difference?
Generally speaking, in the absence of fraud or failure to file the IRS has three years from the date a return is filed to complete an audit. It is not uncommon for the IRS to wait until late in the second year or early in third to begin an audit, and there are many cases where the audit runs up against the three year statutory limit. The key to answering this question lies in the information the IRS has already included in the official “file” of the audit. Any request for an audit appeal will only be based upon the information contained within this file, and it is therefore important to consider a waiver of the statute of limitations in an IRS audit to ensure all of the important documents, figures and updated forms are included within the audit file.
However, in cases where an audit is dragging on or where the IRS is attempting to expand the scope of the audit the experienced IRS tax attorneys at Allen Barron use the approach of the statute of limitations to drive the audit to completion in order to gain a better result for our clients. These decisions are quite complex, and taxpayers facing an IRS audit should seek the advice of experienced and proven IRS audit attorneys at Allen Barron. We invite you to download a free copy of our guide to What to Expect from an IRS Audit and contact us or call for a free consultation at 866-631-3470. Learn about the protections of the attorney-client privilege and the advantages we can provide to reduce your exposure and ultimately any amount you might be required to pay at the completion of an IRS audit.