In recent posts, we’ve been looking briefly at the statute of limitations for the IRS to pursue additional payments in tax audits. As we noted last time, the IRS generally has three years to make tax assessments, does sometimes ask taxpayers to agree to an extension of the deadline for assessing taxes. Though taxpayers do not have to agree to such an extension, doing so can benefit them in some circumstances.
For the IRS, an extension allows extra time to finish an audit and to process the results before making a final decision. Extending the statute of limitations allows a taxpayer additional time to produce documentation to support the taxpayer’s position in the audit or to request an appeal from the results of an audit. It can also give a taxpayer additional time to claim a tax refund or credit.