I received a letter from the iRS stating I had to attend an audit for my tax yr 2009 and 2010 on 3/4/2012. I had moved 1/1/2012 from NH to CA and so, I asked if I could have the audit in CA and they agreed but was told it would take a while to forward my case to CA. I just received a letter from the tax compliance officer at the IRS in NH asking me to sign form 872 consenting to extend time to assess tax. This form I ahve been told ensures that the statute does not expire while your federal tax returns are in process of being audited. I have been told that the statute is 3 yrs after date filed, not the 7 yr period that I thought. What is the length of the IRS audit statute? If it is 3 yrs then I assume that 2009 and prior year taxes can't be audited since I filed them timely, is this true? Should I sign the form just for tax yr 2010? I fear if I don't they could force me to return to NH to be audited. If I sign then, if an error is found in my taxes then penalties and interest could be charged up to the date of the audit and form 872 would extend to 12/2014 I would prefer to do the audit for 2010 this year to avoid further penalties, if applicable. Lastly, they stated that if they found errors they could audit prior years, can they if the statute expired?. Thanks Linda
Country relating to Question: United States
I would like to ask a questions to a tax attorney
Welcome to Just Answer. I am here to help you resolve your tax and finance concerns. Please feel free to ask anytime you need extra help.
The audit statute, in the absence of criminal issues, is 3 years from the latter of the return due date or the actual filing date.
However, the tax year 2009 is still open since the due date was April 15, 2010 and the statute will not expire until April 16, 2013.
In very simple English, I recommend that you sign and mail in the extension as soon as possible. If the IRS agent does not receive it he will act in the standard IRS manner - he will disallow all exemptions other than yourself, disallow all itemized deductions, add income to cover eventualities and disallow all self employment expenses. In other words he will generate a jeopardy assessment to protect the IRS. You can pay this or begin the more costly appeals process. To avoid this, sign and mail in the extension.
In the audit process the IRS can open expired years but only if they have reason to believe fraud. They do not have to prove fraud to open those closed years just have reason to believe. It is seldom done if there is no suspicion of criminal activity.
over 40 years experience in tax matters