The right to reach a resolution – Taxpayer Bill of Rights No. 6

Taxpayers who interact with the IRS are entitled to the resolution. This right comes into play for taxpayers who are going through an audit. These taxpayers have the right to know when the IRS has completed a review (audit). This is one of the 10 basic rights – known collectively as the Bill of Rights as a Taxpayer (TBOR) – that all taxpayers are dealing with the IRS.

For taxpayers who are in the process of a review (audit), this is what you should know about the right to the resolution:

• Taxpayers have the right to know:
  • The maximum amount of time you have to play the IRS position.
  • The maximum amount of time the IRS has to review a specific tax year or collect a tax debt.
  • When the IRS has completed a review (audit).
• The IRS generally has three years from the date on which taxpayers file their statements to assess any additional tax for that fiscal year.
• There are some limited to three years rule exceptions, even when taxpayers do not have the statements for specific years or presenting false or fraudulent statements. In these cases, the IRS has an unlimited amount of time to assess the tax for that fiscal year.
• The IRS generally has 10 years from the date of assessment to collect taxes that are owed. This 10 – year period can not be extended except for taxpayers who enter into installment agreements or the IRS gets judgments.
• There are circumstances in which the collection period of 10 years may be suspended. This can happen when the IRS can not collect money due to the bankruptcy of the taxpayer or there is a due process procedure that involves billing the taxpayer.
• A legal notice of deficiency is a letter proposing an additional tax that the taxpayer owes. This notice must include the deadline for filing a petition with the tax court to challenge the proposed amount.
• In general, a taxpayer will only be subject to audit by tax year. However, the IRS may reopen an audit for the previous fiscal year, if the IRS deems necessary. This could happen, for example, if a taxpayer files a fraudulent return.

For more information:
Publication 1 , Taxpayer Rights
Taxpayer Advocate Service