You might be wondering if the IRS can, with impunity, just keep after you year after year about every little detail of a single year's return. That's where the Right to Finality comes in. One aspect of the right to finality is the right to know the maximum time the IRS has to audit a particular tax year. You also have the right to know how much time you have to challenge an IRS decision, how long the IRS can come after you for a tax debt, and when the IRS is finished with an audit.
The IRS generally can go back three years to audit a return. If they find a substantial error, they can go back 6 years. The IRS is not in the business of trying to force taxpayers to pay more taxes, but the tax law has to be applied and administered correctly. That IS their job. Once they come to a decision, the IRS will inform you in most correspondence how long you have to respond, how long you have to pay any additional tax, and how long you have to challenge their decision. Those deadlines are hard and fast so don't put anything off. If you miss a deadline, you may lose all chance of challenging the IRS's decision.
In most of the correspondence that i have seen, the IRS gives you thirty (30) to ninety (90) days to respond or file with the Tax Court. Read your correspondence carefully. As I said before, deadlines are hard and fast so take note of them. Once a decision or tax amount is determined, the IRS will inform you about how and when to pay. You can even, in most cases, set up a payment plan to make it easier for you to fulfill your tax obligation.
The notices you receive from the IRS will always be written and not by phone or email. Once you have been audited and the IRS is complete they WILL send you a final letter letting you know the final decision. They will not "leave you hanging." The IRS does not want cases to be unresolved or in limbo due to tax being uncollectable. The IRS has procedures for almost every case.
Rest assured, once you start working with the IRS, they do and want to end each and every audit or collection. It may seem as if there is no end in sight, but the IRS does want to bring an end to to each case and you, as a taxpayer, have the Right to Finality when it comes to the IRS. If you are not satisfied with the pace or the constant back and forth, talk to a supervisor.They will work with you to get the issue or issues resolved.