No business ever wants to get audited. Not only does it take forever to complete, but it can seriously hurt one’s reputation when it does happen. Unfortunately, audits happen, especially to companies that have suspicious financial activities.
If it ever happens to you, the burning question in your mind might be the same as every other company that has had to go through an audit: how long will it take for the IRS to finish the audit?
The answer? Unfortunately, there’s no specific figure to stick to. Some have claimed it to be three years, some even up to six years. There isn’t a specific timeline the IRS sticks to finish their audits; however, what we do know is that you have certain rights you may not realize you have regarding the audits!
The IRS and the Statute of Limitations
Because of how incredibly long some of these audits can get, Congress has put down a deadline for the IRS to stick to when running audits and carrying out other activities. This activity is known as the statute of limitations. It also limits what the IRS can look at, which, in this case, would be tax returns filed within the last three years. Of course, the limitation also applies to the taxpayer to file a claim for a tax refund or credit!
That said, once the statute of limitations is about to reach its end, the IRS will need to ask for your consent to extend the period should they need it—which we will get to in the next topic.
Giving IRS the Consent to Extend the Time Period
As mentioned, the IRS will need to ask for your consent if they need more time reviewing your information. You can always say no to this—but remember that this will leave the IRS with the information they collected! If you have any other information you want to present to them, you will need to agree to the extension of the statutory period.
The actual consent itself is a written agreement where you state that you agree to the extension of the statutory period via the consent form. You will typically have either a fixed-date consent or an open-ended consent. As the name implies, a fixed-date consent gives the IRS up to the fixed date to perform their duties, while an open-ended consent means that you give the IRS as much time as they need.
If you were ever asked to sign for any consent, you can either negotiate the consent terms, sign the unconditional consent, or refuse to sign entirely. The choice is yours.
No one knows how long the IRS exactly takes to audit a company for sure. The agency claims that the length varies based on factors like the complexity of the issues, the availability of information, and the availability for parties to meet up.
Regardless, that time is a really long time, and the only true way to know how long it may take is to look at the statute of limitations. That being said, if you are lucky, the findings of the IRS will come quickly, and will not do anything to hurt your company. However, there are some cases where the IRS may pull information that you disagree with. If you want to oppose such information, you can enter mediation or file an appeal during their statutory period.
Axiom Tax Resolution Group are composed of tax resolution services specialists in Birmingham that help find solutions to solve any tax problems with the IRS. If you require tax resolution services in the US, work with us today!