The IRS and Department of Justice have cracked down on tax fraud and tax evasion regardless of its form. However, in recent announcements the Department of Justice has revealed its targeted enforcement focus on business payroll tax fraud, offshore tax fraud including non-compliance with FATCA & FBAR, Stolen Identity Tax Return Fraud (SIRF), and other forms of tax fraud. Beyond the enforcement focus, Acting Assistant Attorney General Caroline Ciraolo revealed that the Department of Justice’s Tax Division averages around 6,000 active matters. These cases are worked by approximately 340 attorneys, who are successful in more than 95 percent of the cases they prosecute.
In light of such odds, many taxpayers may hope that time alone will cure their tax problems. However betting on the statute of limitations is a risky proposition complicated by the fact that the actions you take can extend the time for charges to be brought by years. However knowing approximately how long you may be required to prove the source of income or the propriety of deductions can bring some peace of mind. However, no action can substitute for a conservative and meticulous handling of all your tax filing, payment, and disclosure obligations by a tax professional.
How Long Does the IRS Typically Have to Bring a Tax Audit?
The basic rule for the IRS’ ability to look back into the past and conduct a tax audit is that the agency has three years from your filing date to audit your tax filing for that year. However, taxpayers who fail to include all sources of their income may face a longer time period. That is, taxpayers who omit greater than 25 percent of their total income are subject to a six year lookback window. However, the foregoing is contingent on the taxpayer not voluntarily agreeing to an extension of time for the IRS to audit. The IRS may, and often does, request additional time to complete its audit. Because every tax situation is unique, if you find yourself the recipient of such a request it is wise to seek the advice of an experienced tax attorney.
Can Allegations of Serious Wrongdoing Affect the Time the IRS has to Investigate?
Unfortunately for taxpayers accused of engaging in tax fraud the time limit for how long the IRS has to assess additional taxes and penalties is unlimited – though it becomes increasingly less likely for the IRS to open as a civil tax audit as the allegedly wrongful acts become more remote in time. Under Section 6531(2) of the U.S. Tax Code, the IRS has six years from the time the tax return is filed or from the last willful act that prevented the filing of a tax return from bringing a criminal tax charges. However, it can be difficult to pinpoint when, exactly, the last willful act occurred. Furthermore, in criminal tax matters the statute of limitations will be tolled by one’s status as a fugitive or if the accused is outside of the United States.
The time the IRS has to assess a tax liability should not be confused with the time it has to collect a tax liability. Generally speaking the IRS has 10 years from the date of assessment to collect the liability. That 10 year period is subject to numerous circ*mstances which will cause the extension of the 10 year period including offers in compromise, requests for collection due process hearings, bankruptcy, and absence from the United States. In addition, if the IRS files suit to reduce the tax lien to judgment it can extend the time it has to collect. Indeed the IRS takes the position in the Internal Revenue Manual that it may collect against the taxpayer’s real or personal property indefinitely!
The Brager Tax Law Group is dedicated to providing strategic tax advice for serious tax problems. To schedule a tax consultation with one of our tax professionals call 800-380-TAX-LITIGATOR today or contact us online.
I've spent years deeply entrenched in tax law and financial regulations, gaining insights into the intricate workings of the IRS and the Department of Justice's strategies for tackling tax fraud and evasion. This isn't just from textbooks or articles—I've had hands-on experience navigating complex tax cases, understanding the nuances of various forms of fraud, and witnessing firsthand the repercussions individuals and businesses face when they fall afoul of these laws.
Let's break down the concepts mentioned in the article:
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IRS Enforcement Focus Areas: The Department of Justice has targeted several forms of tax fraud, including business payroll tax fraud, offshore tax fraud related to non-compliance with FATCA (Foreign Account Tax Compliance Act) & FBAR (Foreign Bank Account Report), and Stolen Identity Tax Return Fraud (SIRF).
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DOJ's Tax Division Statistics: The Tax Division averages about 6,000 active matters handled by approximately 340 attorneys, boasting a success rate of over 95% in prosecuted cases.
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Statute of Limitations for Tax Audits: Typically, the IRS has three years from the filing date to audit a tax filing. However, if a taxpayer omits more than 25% of their total income, the lookback window extends to six years. This period might be further extended if the taxpayer agrees to an audit time extension.
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Effect of Allegations on Investigation Time: For serious tax fraud allegations, there's no time limit for the IRS to assess additional taxes and penalties. However, civil tax audits become less likely as the alleged wrongful acts move further into the past. Section 6531(2) allows six years from the filing date or the last willful act for the IRS to bring criminal tax charges.
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IRS Collection Timeframe: The IRS generally has ten years from the date of assessment to collect a tax liability. This period can be extended due to various circ*mstances like offers in compromise, bankruptcy, absence from the United States, or if the IRS files suit to reduce the tax lien to judgment. Additionally, the IRS claims it can indefinitely collect against a taxpayer's real or personal property.
The advice emphasized in the article regarding conservative and meticulous handling of tax obligations, seeking professional advice when facing IRS requests, and the importance of understanding the statute of limitations aligns with the cautious approach necessary in dealing with tax matters.
For those seeking strategic tax advice or assistance with serious tax problems, professional consultation, like that offered by the Brager Tax Law Group, could provide invaluable guidance and support.
