IRS Statutes of Limitations for Tax Refunds, Audits, and Collections

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The Internal Revenue Service (IRS) gives itself plenty of time to make sure your tax return is correct. The tax code allows the IRS three years to audit your tax return and 10 years to collect any tax you might owe.

There are also deadlines when you must file your return if you want to collect any refund that's owed to you. All of these limits are referred to as an IRS "statute of limitations." Learn more about these deadlines and how they affect you.

How Long Do I Have to Claim a Tax Refund?

You have three years from the date of the original deadline for your tax return to claim any refund you are entitled to. Most years, tax returns are due by April 15. That means you would have until April 15 three years later to file a return and claim your refund.

Note

Some years, the IRS changes the tax filing deadline. For example, in 2021, the deadline to file a 2020 tax return was pushed back to May 17, 2021, due to the coronavirus pandemic. You then have until May 17, 2024, to get any tax refund that's due to you from the 2020 tax year.

This deadline changes by a year if you delay your payment of taxes. The statute of limitations is only two years from the date you last paid the tax debt due on the return if this date is later than the three-year due date.

Your refund expires and goes away forever if you wait longer than the deadline because the statute of limitations for claiming a refund will have closed.

Amended returns claiming additional refunds must adhere to the original statute of limitations: they must be filed with the IRS within three years of the original due date. The three-year statute of limitations clock begins on the day you file your taxes if you get an extension to file your return.

Exceptions to the Three-Year Refund Rule

There are two major exceptions to the three-year statute of limitations on refunds.

  • You have up to seven years to claim a refund due to deductions for bad debt or worthless securities.
  • The three-year statute of limitations does not apply if you are unable to manage your financial affairs due to physical or mental impairments.

What Happens to Your Refund if You Don't Collect?

If you're eligible for a refund but don't file for it within the statute of limitations, the federal government keeps the money. This is considered an "excess collection" in IRS terminology. That refund money cannot be sent to you. And you cannot apply it as a payment toward a future tax year.

How Long Does the IRS Have to Audit Your Tax Return? 

The clock on the three-year statute of limitations for audits begins ticking on the day taxes are due. This deadline applies to most situations. For 2021 tax returns, the deadline to file is April 15, 2022. This means that the three-year statute of limitations will expire on April 15, 2025.

Note

If you ask for an extension of time to file, the IRS would have three years from the date you actually file. The three-year clock would begin ticking in August if you were to file in August.

Most state tax agencies follow the federal three-year period for auditing tax returns, but some have longer statutes of limitations.

Exceptions to the Three-Year Audit Rule

There are exceptions to the three-year federal rule on assessments and audits as well.

  • The IRS has six years from the date you file a return to audit it and to assess additional tax if you omit income worth more than 25% of the income you reported on the return.
  • The IRS also has six years to audit your tax return and assess additional tax on income related to undisclosed foreign financial assets if the omitted income is more than $5,000.
  • The statute of limitations on audits and assessing additional tax can remain open indefinitely if you file a false or fraudulent tax return.

Note

If you submit an amended, non-fraudulent return after submitting a fraudulent one, that does not begin the statute of limitation. The IRS can still audit that return indefinitely.

How Long Does the IRS Have to Collect Taxes? 

The IRS has a set collection period of 10 years. This is the length of time it has to pursue any tax payments that have not been made. The 10-year deadline for collecting outstanding debt is measured from the day a tax liability has been finalized. This can happen in a number of ways. Your liability might be considered finalized because:

  • It's the amount of tax reported on a return that you've filed
  • It's an assessment of additional tax from an audit
  • It's a proposed assessment that has become final

The IRS has 10 years to collect the full amount from the day a tax liability is finalized, plus any penalties and interest. The remaining balance disappears forever if the IRS doesn't collect the full amount within the 10-year period, because the statute of limitations has expired. But there are some situations in which the 10-year statute of limitations on collections can be suspended.

  • While the IRS is reviewing an offer in compromise, installment agreement, or request for innocent spouse relief
  • While a taxpayer is under the automatic stay of bankruptcy protection, plus an additional six months
  • For periods when the taxpayer resides outside the U.S. for at least six months

This suspension means that the clock effectively stops running during these times. For example, the IRS might take a month to evaluate your request for an installment agreement to pay a tax debt you owe. In this case, the 10-year statute of limitations would be pushed back 30 days. Once those 30 days are over, the clock starts again.

Using Time Limits to Plan Your Taxes

It's in your best interest to file your tax returns earlier rather than later. First, you can claim any refund that is due to you. Second, it starts the clock ticking on the three-year statute for audits and the 10-year statute for collections.

Note

Filing your tax return early also reduces the chance that someone else will file a fraudulent tax return using your name and Social Security number.

There are unique planning opportunities available to a you if multiple tax years are involved. That's because you can use any refunds the IRS still owes you under the three-year time limit to pay off other tax debts you owe to the IRS. You can also apply them to your current year's estimated taxes.

Frequently Asked Questions (FAQs)

How long can the IRS hold your refund for review?

The review process can take as long as 180 days. If the IRS requests more information or an amended return, it may take an extra 60 to 120 days to process the new information and issue a refund. Keep in mind that the IRS cannot issue a refund until February 15. This may affect the timeline for people who file early in the year.

What is the statute of limitations on unfiled tax returns?

If you don't file tax returns, the IRS can take as long as it wants to review your taxes and finalize your liability. If the IRS determines that you owe tax, then the statute of limitations starts at that point. If it audits your taxes and determines that you were actually owed a refund after the three-year statute of limitations has passed, then you lose that refund.

What happens if I don't claim my tax refund?

You have ten years after each tax return is due to file and claim a refund. Otherwise, you lose that money.

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Sources
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  1. Internal Revenue Service. "Filing Past Due Tax Returns."

  2. Internal Revenue Service. “Tax Day for Individuals Extended to May 17: Treasury, IRS Extend Filing and Payment Deadlines.”

  3. Internal Revenue Service. "26 C.F.R. 601.105: Examination of Returns and Claims for Refund, Credit, or Abatement; Determination of Correct Tax Liability," Page 1.

  4. Internal Revenue Service. "Topic No. 308 Amended Returns."

  5. Internal Revenue Service. "Statute of Limitations Processes and Procedures."

  6. American Bar Association. "IRS Can Audit for Three Years, Six, or Forever: Here's How to Tell."

  7. Internal Revenue Service. "Collection Statute Expiration."

  8. Taxpayer Advocate Service. "Held or Stopped Refunds."

  9. Internal Revenue Service. "Topic No. 153 What To Do If You Haven't Filed Your Tax Return."

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