How Far Back Can the IRS Audit? The 3-Year, 6-Year, and No-Limit Rules

The IRS generally has three years from the date you filed your return to assess additional tax. That is the default under IRC 6501(a). Two common exceptions extend it: the six-year window under IRC 6501(e) when you omitted more than 25% of your gross income, and the unlimited window under IRC 6501(c) for fraud, willful evasion, or unfiled returns. For cross-border filers, the six-year rule matters most, because unreported foreign income (RRSP gains you did not know were taxable, TFSA income, rental income from a Canadian property) can easily push the omission past 25% of reported gross income without any intent to evade.

What is the general three-year rule?

The IRS must assess additional tax within three years after the return was filed. IRC 6501(a) states it plainly: “the amount of any tax imposed by this title shall be assessed within 3 years after the return was filed.” If you filed your 2024 return on April 15, 2025, the IRS has until April 15, 2028 to assess additional tax for that year. If you filed early (say, February 1, 2025), the clock still starts on the due date (April 15, 2025), because a return filed before the due date is treated as filed on the due date under IRC 6501(b)(1).

If you filed late without an extension, the clock starts on the actual filing date. If you filed on extension and submitted your return on October 10, 2025, the three-year window runs from October 10, 2025 to October 10, 2028.

The three-year rule is the one most people reference when they say “the IRS can only go back three years.” It is correct as far as it goes, but two exceptions swallow a large share of cross-border cases.

When does the IRS get six years?

The six-year statute applies under IRC 6501(e)(1)(A) when a taxpayer “omits from gross income an amount properly includible therein and such amount is in excess of 25 percent of the amount of gross income stated in the return.” The IRS does not need to prove fraud or intent. The omission itself extends the window.

The math: if your return reported $100,000 of gross income and you failed to include $30,000 of income from a Canadian source, the omitted amount ($30,000) exceeds 25% of reported gross income ($25,000), and the six-year rule applies. For cross-border filers, this is the most common extended-statute scenario, because foreign income is easy to miss. An RRSP that earned $15,000 in interest and capital gains inside the plan, a TFSA that earned $8,000 in dividends, rental income from a Canadian property, or employment income from a Canadian employer during a transition year can each push the omission past 25%.

The six-year rule also applies to specified foreign financial assets under IRC 6501(e)(1)(A)(ii): if a taxpayer omits from gross income an amount attributable to one or more assets with respect to which information is required to be reported under IRC 6038D (Form 8938), the six-year period applies. The IRS added this provision specifically to reach foreign asset income that FATCA was designed to surface.

An important nuance: adequate disclosure can defeat the six-year extension for certain items. Under IRC 6501(e)(1)(B), an item disclosed in the return or in a statement attached to the return is not treated as omitted, even if the income was underreported. But this safe harbor requires specific disclosure. Simply including a partial amount on the wrong line does not count.

When is there no statute of limitations at all?

Three situations eliminate the time limit entirely under IRC 6501(c):

Fraud. If the return is “false or fraudulent” with the intent to evade tax, the IRS can assess additional tax at any time. There is no expiration. The burden is on the IRS to prove fraud by clear and convincing evidence, but once established, every year the fraudulent return covered is open indefinitely.

Willful evasion. If the taxpayer willfully attempted in any manner to defeat or evade tax, the statute does not run. This is distinct from fraud on the return itself. It covers affirmative acts of evasion (hiding income, filing false documents, using nominee accounts) even if the return as filed was not technically fraudulent.

No return filed. If you never filed a return for a year, the statute never starts. The IRS can assess tax for that year at any time, regardless of how many years have passed. For cross-border filers who did not know they had a US filing obligation (a common situation for US citizens who grew up in Canada and never filed), every unfiled year remains open until the return is filed and the statute begins to run.

This is why the streamlined filing compliance procedures exist. A US citizen living in Canada who has never filed US returns has an unlimited statute on every year. The streamlined program limits the catch-up to three years of income tax returns and six years of FBARs, with a certification that the failure was non-willful. Without the streamlined program, the IRS could technically assess tax for every unfiled year going back to the taxpayer’s first year of earning income.

Does the statute of limitations apply to FBAR penalties?

The FBAR statute of limitations is separate from the income tax statute. Under 31 USC 5321(b)(1), the government must assess an FBAR penalty within six years of the date of the violation. The violation date is the FBAR due date for the year in question (April 15 of the following year, with an automatic extension to October 15).

If you failed to file an FBAR for 2020 (due April 15, 2021, extended to October 15, 2021), the six-year window for FBAR penalties runs to October 15, 2027. This is independent of the income tax statute. The IRS can be time-barred from assessing income tax for a year but still within the window for FBAR penalties, or vice versa.

The FBAR penalties themselves are substantial: up to $16,987 per non-willful violation (adjusted annually for inflation) and the greater of $100,000 or 50% of the account balance for willful violations. Unlike the income tax statute, there is no three-year default for FBARs. It is six years across the board, regardless of whether the failure was innocent or willful. The willfulness determination affects the penalty amount, not the assessment window.

For Form 8938 (the FATCA reporting form), the penalty is assessed under the income tax statute, not the BSA statute. A $10,000 penalty for failure to file Form 8938 is assessed within the income tax statute of limitations for the year in question, which could be three years, six years, or unlimited depending on the circumstances described above.

How does this affect cross-border filers specifically?

Cross-border filers face a compound risk. The three-year default is the shortest window, and it applies only when the return was filed, was not fraudulent, and did not omit more than 25% of gross income. For a US citizen living in Canada who files US returns but misses some Canadian-source income, the six-year rule often applies because foreign income that does not appear on a US information return (no 1099, no W-2) is easy to leave off the return entirely.

The practical implication: if you have been filing US returns but not reporting your RRSP income, TFSA income, or Canadian rental income, your exposure window is likely six years, not three. If you have never filed US returns at all (common for accidental Americans and US citizens who left as children), every year is open indefinitely until you file.

The streamlined procedures are the standard resolution for non-willful failures. They require three years of amended or delinquent income tax returns and six years of FBARs, with a certification of non-willfulness. The late FBAR guide walks through whether delinquent filing or the streamlined program is the right path based on your specific facts.

What should I do next?

If you have unfiled US returns or unreported foreign income, the statute of limitations is working against you on FBARs (six-year fixed window) and in your favor on income tax (the clock does not start until you file). The longer you wait, the more FBAR years accumulate within the penalty window, but the income tax years stay open regardless. Filing through the streamlined program is the standard path for non-willful cases.

• What does the streamlined procedure cost for Canadians?, the compliance program for non-willful failures
• Streamlined domestic offshore procedures (Form 14654), the US-resident version of the streamlined program
• Late FBAR: delinquent filing or streamlined?, choosing the right path for missed FBARs
• FATCA explained, the law behind Form 8938 and the foreign bank reporting
• Form 8938 vs FBAR: do I file both?, the two reporting obligations that often trigger the audit

This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.