RETENTION OF RECORDS - Generally
• Except in cases of fraud or substantial understatements of income, IRS can only assess tax for a year within three years after the return for that year was filed.
• Example: if your 2010 individual income tax return is filed by its original due date of April 18, 2011, IRS will have until April 18, 2014 to assess a tax deficiency against you. If you filed the return late on November 1, 2011, IRS will have until November 1, 2014 to assess a tax deficiency against you.
• The assessment period is extended to six years if more than 25% of gross income is omitted from a return
• Where no return was filed for a tax year, IRS can assess tax at any time (even beyond three or six years)