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Can the IRS audit me two times in two years?

Under the rules of double jeopardy, The Internal Revenue Service cannot audit the same income tax return a second time, if the initial examination was actually completed. That means that you would need to have received a final findings report from The IRS. They can certainly look at two different years in that time span, but if completed, they cannot look at the same year a second time.

Usually, when this question is asked, it’s because you are in the middle of an audit which is not going well. Let's say that they are looking at last year's income tax return, and they start finding all sorts of additional tax that you are going to owe. You don't really think that they are going to stop at the one year, do you? They have the right to open up any returns which were filed within thirty-six months of the date of the audit. Normally they can go back through three years of tax returns. If, after an audit, the IRS can prove fraudulent intent, they can go back further than the thirty-six month statute. In order to prove fraudulent intent, they must audit within the statute and find more than a twenty percent change in taxable income.

But many people are confused by these rules so let's use an example to illustrate these more clearly...

Let’s say that your 2010 income tax return is filed on April 15th of 2011. You get a notice from the IRS saying that your 2010 return is being audited on March 1st of 2014. Can they do this? Yes. It’s within 36 months of the date that the return was filed.

Let's say that you had a bad accountant and even worse representation during the audit. So on April 1st of 2014 you get a notice saying that they are also opening up for audit the 2011 and 2012 income tax returns. Can they do this? Yes. It’s not the same year, so it doesn't fall inside the double jeopardy rules, and the additional two years are within the thirty-six month statute.

Let's also say that in the initial audit, once the auditor was done, and your bad accountant had made even more mistakes, the taxable income on the return had increased by 35%. You now get a notice stating that they want to look at 2009, 2008, and 2007. Can the IRS do this? Yes. Even though they are outside of the original statute of limitations, they can open up these years because they have exceeded the burden of proof for the definition of “fraudulent intent.” At this point, the IRS can go back as far as they would like.

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