Accepted Answer

Hello,

Thanks for your question.

Generally, the IRS will start an audit of only one year. If they find many items to be mis-stated or the same item mis-stated on other years, they may expand the scope of the audit to include more years. Usually they can't go back more than 3 years unless they believe fraud is involved or you understated your income by more than 25% in which case they can go back up to 6 years. This is because there is a 3-year statute for assessments. If you filed your 2005 calendar year income tax return by the extended due date of 10/15/2006, the statute expired on 10/15/2009. So unless those exceptions apply, they will not be able to assess tax on thatyear. Also, depending what form you file the fye 6/30/2006 company form (1065, 1120, 1120-S), assessment statute date may be expired if you filed, for example your Form 1120 by the normal due date, 9/15/2006. However, the IRS can legally ask to see your returns from up to 7 years back from now since they recommend you keep tax returns for up to 7 years.

You may want to ask the IRS agent that you believe the 3-year statute for 2005 and 6/30/2006 is expired and you would like them to explain why they need those years.

Hope this helps,
Sincerely,

Edited by JK_CPA on 11/4/2009 at 5:28 AM

Expert:	JK_CPA
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Accepts:
Answered:	11/4/2009

Certified Public Accountant (CPA)

with 5 years accounting experience and 18 years tax experience.