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How Many Years Can the IRS Go Back to Find Fraud?

October 06, 2022

How Many Years Can the IRS Go Back to Find Fraud?

In recent years, the IRS and the U.S. Department of Justice have put a renewed focus on investigating and prosecuting cases of federal tax fraud. Particular types of tax fraud that federal investigators are focusing on include payroll tax fraud, offshore tax fraud, and stolen identity tax fraud. Every year, the DOJ investigates and prosecutes around 6,000 cases of tax fraud, with about 95 percent of cases resulting in a settlement or a conviction. 

Because only several thousand cases of tax fraud are prosecuted each year and federal authorities tend to focus on certain types of tax fraud, some taxpayers may hope that underpayments or other tax issues may simply go away in time. While charges of tax fraud are subject to statutes of limitations, the length of the limitations period on tax fraud charges in your case may be affected by actions that you have taken. This makes it important to speak to a tax fraud defense attorney as soon as possible if you believe you may be under investigation. 

How Long Does the IRS Have to Conduct a Tax Audit?

The standard rule gives the IRS three years from the date that you filed a tax return to conduct an audit of that return. However, the lookback period can be extended in certain circumstances. For example, if you underreport your income on a tax return by at least 25 percent, the IRS has up to six years from the filing of the return to conduct an audit. In addition, you can voluntarily agree to give the IRS additional time to complete an audit of your return. In many cases, the IRS will ask you to extend the time for an audit, which makes it important to speak to a tax fraud attorney if you are contacted by the IRS. 

Do Allegations of Tax Fraud Give the IRS More Time to Investigate?

If the IRS claims that you have engaged in tax fraud with respect to your tax return for a certain year, the IRS has unlimited time to assess additional taxes and penalties, provided that the IRS has the information necessary to calculate your additional taxes and penalties. However, when it comes to criminal charges, federal prosecutors have limited time in which to file charges against you. Normally, the U.S. Attorney’s Office has six years from the date that your tax return was filed or six years from the last willful act that resulted in the non-filing of your tax return, whichever is later, to bring tax fraud charges. Because when the “last willful act” that prevented the filing of your tax return is a complicated question, federal prosecutors may have a long time to bring a tax fraud case against you. In addition, becoming a fugitive or leaving the U.S. will pause or “toll” the running of the statute of limitations on tax fraud charges. 

Once the IRS determines that you have a tax liability, it has 10 years from notice of that liability to collect, although the 10-year period can be paused for things like offers-in-compromise, collection due process hearings, and bankruptcy. 

Contact an Experienced Moorestown Criminal Defense Lawyer About Your Tax Fraud Charges in New Jersey

Were you arrested or charged with tax fraud in New Jersey? The consequences of a conviction could be severe, leaving you with a permanent criminal record and possibly even sending you to jail. That is why you need to speak with a qualified criminal defense attorney as soon as possible about your case. The Law Offices of Michele Finizio have represented clients charged with tax fraud in Evesham Township, Mount Laurel, Willingboro, Pemberton, and throughout New Jersey. Call (609) 230-0374 or fill out the online contact form to schedule a consultation with a member of our legal team. We have an office conveniently located at 9 E. Main St., Moorestown, NJ 08057, as well as offices located in Cherry Hill.

The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney-client relationship. If you are seeking legal advice, please contact our law firm directly.

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