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

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 return and possibly longer under some circumstances. It has 10 years to collect any tax you might owe.

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

Key Takeaways

• You usually have three years from the due date of your tax return to claim a refund due on that return, although there are some exceptions.
• The IRS has three years to audit your tax return in most cases, but this can be extended to six years or even indefinitely under some circumstances.
• The IRS can continue to try to collect taxes you owe for 10 years.
  

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 that you're entitled to. Tax returns are due by April 15 in most years, so you would have until April 15 three years later to file a return and claim your refund.

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 tax return if you get an extension to file it.

Note

The IRS changes the tax filing deadline in some years. The deadline to file a 2022 tax return is April 18, 2023, because April 15 falls on a Saturday and April 17 is a holiday in Washington, D.C. You would then have until April 17, 2026 to file and get any tax refund that's due to you for the 2022 tax year.

Exceptions to the 3-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 doesn't apply if you're unable to manage your financial affairs due to physical or mental impairments.

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

The federal government gets to keep the money if you're eligible for a refund but don't file for it within the statute of limitations. This is considered an "excess collection." The refund money can't be sent to you and you can't 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. The deadline to file 2022 tax returns is April 18, 2023 so the three-year statute of limitations will expire on April 18, 2026.

Note

The IRS would have three years from the date you actually file if you ask for an extension of time to file. The three-year clock would begin ticking in August in this case 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 that's 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.

Warning

It doesn't begin the statute of limitations if you submit an amended, non-fraudulent return after submitting a fraudulent one. 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's given 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 resulting 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

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

Using Time Limits To Plan Your Taxes

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

Important

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.

You have some unique planning opportunities if multiple tax years are involved 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. The IRS can take an extra 60 to 120 days to process the new information and issue a refund if it requests more information on an amended return. Keep in mind that the IRS can't issue a refund until Feb. 15 if you claim the Earned Income Tax Credit or the Additional Child Tax Credit on your return. This can affect the timeline for people who file early in the year.

What is the statute of limitations on unfiled tax returns?

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