Statute of Limitations on Tax refers to the legally defined period during which a taxpayer can challenge a tax assessment or the tax authorities can initiate an audit or collect taxes owed.
In the context of federal taxes in the United States, the typical statute of limitations is three years from the date a tax return is filed. However, this period can be extended to six years if the taxpayer underreports income by more than 25%, or indefinitely in cases of fraud or if no return is filed.
For example, if a taxpayer files their 2020 tax return on April 15, 2021, the IRS generally has until April 15, 2024, to audit that return or collect any tax due, unless the return has significant underreported income or is otherwise subject to an extended period.
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