Today, Optima Tax Relief Lead Tax Attorney, Phil, discusses each of the three IRS 6-year rules.
Underreporting Income by Over 25%
If you underreport your income by over 25%, the IRS has six years from the date the return was filed to assess additional taxes, instead of the usual three years. The 25% threshold is calculated based on the amount of gross income that should have been reported. Gross income includes all income before deductions and exemptions. This can include wages, business income, rental income, interest, dividends, and other forms of income.
Non-Filing
The IRS generally requires taxpayers to file tax returns for the past six years if they have not filed them previously. This means if you have not filed a tax return in the last 10 years, the IRS will only require you to file the most recent six past-due returns.
Installment Agreements
Generally, if a taxpayer can pay off their tax debt within six years, they may qualify for streamlined installment agreements where detailed expense documentation, like receipts, may not be required for reasonable expenses. These expenses typically include food, clothing, housing, utilities, transportation, and healthcare.
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