How it works
The IRS generally has three years from the date a return is filed to assess additional tax. The period is six years if the return omitted more than 25 percent of gross income, and unlimited if the return was fraudulent or never filed. Certain international information returns keep the entire return open until they are filed. The clock starts at filing, not the due date, and amended returns do not restart it.
Why it matters
Which window applies determines how many years an audit or a cleanup has to cover. Unreported crypto that exceeds 25 percent of gross income triggers the six-year window, and a pending John Doe summons can suspend the clock entirely.
Example
A taxpayer filed her 2020 return in April 2021, omitting 90,000 dollars of crypto gains on 200,000 dollars of gross income. Because the omission exceeds 25 percent, the IRS can assess through April 2027, not April 2024.
Related: collection statute, summons tolling.
