Welcome to TaxBlawg, a resource from Chamberlain Hrdlicka for news and analysis of current legal issues facing tax practitioners. Although blawg.com identifies nearly 1,400 active “blawgs,” including 20+ blawgs related to taxation and estate planning, the needs of tax professionals have received surprisingly little attention.
The Wall Street Journal's Tax Blog gives “tips and advice for filers,” and Paul Caron’s legendary TaxProf Blog is an excellent clearinghouse for academic and policy-oriented news. Yet, tax practitioners still lack a dedicated resource to call their own. For those intrepid souls, we offer TaxBlawg, a forum of tax talk for tax pros.
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People are always asking how long the IRS can wait from the time you file your return to conduct an audit of your income and expenses. The simple, most definitive answer is "it all depends," so let's take a look at the rules.
The time in which the IRS must conduct its audit is governed by what's known as a "statute of limitations." That statute doesn't begin to run until you actually file a return. Once you file a return, the IRS has three years from the time the return was filed (or, April 15th of the year in which you file, if it is filed early) to conduct and complete an audit. That means that the IRS has to select your return for examination, conduct whatever level of audit it is going to perform, and either get an agreement from you to an additional amount of tax or a refund, secure an extension of limitations period from you, or issue you a document known as a "Notice of Deficiency" (indicating what it has determined your correct tax liability to be and giving you ninety days to go the United States Tax Court).
If it fails to complete one of these actions within three years, in most situations the proverbial “ballgame” is over and it will be too late for the IRS to assert an additional tax liability for that year. The filing of an amended return does not extend the period in which an audit must take place. As you might expect, however, there are exceptions.
David J. Shakow is counsel in the Philadelphia office of Chamberlain, Hrdlicka, White, Williams & Aughtry and is professor emeritus at the University of Pennsylvania Law School.
The Supreme Court's decision in Home Concrete raises new questions about the deference to be given to administrative pronouncements that conflict with prior judicial decisions. Unfortunately, the opinions of a divided Court leave practitioners to puzzle over the boundaries of its decision.
This article originally appeared in Tax Notes. Copyright 2012 David J. Shakow.
All rights reserved.
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