Question

When does the statute of limitations generally end for tax noncompliance when fraud is not a factor?

A) 1 year after the tax return was filed
B) 2 years after the tax return was filed
C) 3 years after the tax return was filed
D) 10 years after the tax return was filed

Answer 1

The statute of limitations for tax noncompliance without fraud typically ends 3 years after the tax return was filed, allowing the IRS a three-year window to audit returns.

Step-by-step explanation:

The statute of limitations for tax noncompliance when fraud is not a factor generally ends 3 years after the tax return was filed. This means that the Internal Revenue Service (IRS) has a three-year window to audit tax returns and assess any additional taxes. However, if there is a substantial omission of income (more than 25% of the income stated on the return), the statute of limitations extends to six years. It's important to note that the statute does not begin until the tax return is actually filed. If a return is filed before the tax deadline (typically April 15), the statute begins on the deadline date. For a fraudulent or false return, or when no return is filed, the statute of limitations for tax assessment does not expire.