Can the IRS Reopen a Closed Audit?

Many taxpayers assume that once an IRS audit ends, the matter is permanently behind them. In many cases that is true—but not always. Under certain circumstances, the IRS may reopen a closed examination and request additional information or assess additional tax.

When Can the IRS Reopen an Audit?

The IRS generally will not reopen an examination unless one of the following applies:

• There is evidence of fraud or misrepresentation.


• Substantial errors are discovered.


• New information becomes available that could affect the original findings.


• The prior examination involved a clear administrative mistake.

The Internal Revenue Manual provides that reopening a closed audit should be done only in limited situations, and taxpayers are entitled to fair treatment throughout the process.

How Long Does the IRS Have?

Generally, the IRS has three years from the date a return is filed to assess additional tax. However, that period can be extended in certain situations, including:

• A six-year statute of limitations when more than 25% of gross income is omitted.


• No statute of limitations in cases involving fraud or when a return was never filed.


• Situations where the taxpayer agreed to extend the assessment period by signing Form 872.

What Should You Do If the IRS Contacts You Again?

If you receive correspondence indicating that a previously closed examination is being revisited:

1. Do not ignore the notice.


2. Gather copies of prior audit reports, correspondence, and supporting documentation.


3. Verify what years and issues are involved.


4. Consult with a qualified tax professional before responding.

The Bottom Line

Although reopening a closed audit is relatively uncommon, it does happen. Taxpayers should understand their rights and respond carefully to any renewed IRS inquiry. Early intervention can often help resolve issues before they escalate into additional assessments, penalties, or collection actions.

If you have received correspondence from the IRS concerning a prior examination, the experienced tax controversy attorneys at Wilson Tax Law Group can help evaluate your options and protect your rights.

Wilson Tax Law Group, APLC is a boutique Orange County tax controversy law firm that specializes in representation of individuals and businesses before federal and state tax authorities with audits, appeals, FBAR, offshore compliance, litigation and criminal defense. Firm founder, Joseph P. Wilson, is a former Federal tax prosecutor and trial attorney for the IRS and California Franchise Tax Board. Wilson Tax Law Group, APLC, is comprised of former IRS litigators & Special Agents, and Assistant US Attorneys from the US Attorney’s Office, Central District of California, Tax Division, which at the time handled both civil tax lawsuits and criminal tax prosecutions on behalf of the United States of America.

For further information, or to arrange a consultation please contact: Wilson Tax Law Group, APLC Tel: (949) 397-2292 (Newport Beach Office) Tel: (714) 463-4430 (Yorba Linda Office)

Disclaimer: This blog post is for informational purposes only and does not constitute legal, tax or financial advice. Please consult with a qualified attorney, accountant or financial advisor for specific guidance related to your circumstances.