- 1 How Long Does an IRS Audit Take to Complete?
- 2 Not all IRS Audits are the Same
- 3 More Complicated IRS Audits Take More Time to Complete
- 4 Eggshell and Reverse Eggshell IRS Audit
- 5 Was the IRS Audit Expanded?
- 6 It May Lead to A Criminal Investigation
- 7 Post-Audit
- 8 Taxpayers Should be Diligent so the Audit Completes Faster
- 9 Golding & Golding: About Our International Tax Law Firm
How Long Does an IRS Audit Take to Complete?
How Long Does an IRS Audit Take to Complete: When a Taxpayer is under audit by the IRS, it can feel like it can take a lifetime to complete. Oftentimes, the Internal Revenue Service takes a significant amount of time in completing the tax audit. In some scenarios, the Taxpayer may actually think the audit is nearly complete, when the IRS agent then sends out another IDR (Information Document Request)to the taxpayer — which then leads to another round of questions, and the exam continues on. One very common question we received is: how long does an IRS audit take to complete? Let’s go through the basics of how to determine the length of an Internal Revenue Service Examination.
Not all IRS Audits are the Same
When it comes to determining how long an IRS audit takes to complete — it is not a one size fits all answer. Some tax audits with the IRS can take several years to complete — this is especially true when it involves businesses, foreign income, employment tax and other more complicated tax issues. For the most part, a noncomplex tax audit will generally resolve in 3-9 months — unless the Taxpayer requests an audit reconsideration or other appeal if applicable.
More Complicated IRS Audits Take More Time to Complete
When a tax audit is more complicated, it will presumably take longer to complete. For example, if a Taxpayer has unreported foreign income, assets and investments — the audit can take significantly longer than it the taxpayer merely has some unreported US income. In addition, if there is any concern about criminal issues, then the Taxpayer has to move very cautiously through the audit — which may result the IRS recommending a Special Agent investigation.
Eggshell and Reverse Eggshell IRS Audit
With an eggshell audit, the Taxpayer has information concerning certain unreported monies that the Internal Revenue Service may not yet have. On the one hand, the taxpayer does not want to self-incriminate themselves, but on the other hand they do not want to intentionally omit information that could be considered perjurious. With a reverse eggshell audit, the Internal Revenue Service already has incriminating evidence against the taxpayer. Depending on the strategy the IRS takes, it could expand the time of the IRS audit to complete.
Was the IRS Audit Expanded?
Sometimes when an audit is initiated, it only is based on one tax year and/or possibly one or two limited issues. Depending on what the IRS agent finds during the audit and based on the examination responses provided by the Taxpayer — it may lead to the IRS agent expanding the audit into other tax years and other issues.
It May Lead to A Criminal Investigation
Sometimes, the IRS examiner may find information which they believe Shows that the taxpayer violated criminal tax laws — but legally they are limited to what they are allowed to examine the Taxpayer about — and it does not include criminal matters. When the IRS Agent/Examiner believes the Taxpayer may have committed a tax crime, they will typically stop the current audit. And the while it may appear that the audit is complete — in reality, the case is just being prepped for a (more serious) Special Agent Investigation.
Even after the examiner has completed the audit, the Taxpayer has an opportunity to dispute the outcome. Whether the Taxpayer qualifies for an audit reconsideration or other type of appeal — and takes advantage of the opportunity to dispute the initial outcome of the IRS audit — would of course prolong the length of time for the audit to complete — since it will not finalize and close-out.
Taxpayers Should be Diligent so the Audit Completes Faster
Taxpayers should do their best to be cooperative with the IRS agent handling the examination. Taxpayers should consider retaining counsel and evaluate the facts and circumstances carefully — but the taxpayer should always remain respectful.
Golding & Golding: About Our International Tax Law Firm
Golding & Golding specializes exclusively in international tax, and specifically IRS offshore disclosure.
Contact our firm for assistance.