Taxpayers should keep their tax returns, and supporting documents related to their tax returns, for as long as their state tax agency and the Internal Revenue Service have to perform an audit. These deadlines are known as statutes of limitations.
For most people, this means keeping your tax records for at least three years from the date you file your tax return or the due date of the tax return, whichever is later.
That's the most common deadline for the IRS, although it can extend this period to six years under some circumstances, such as if the income you report is more than 25% off from what it actually was.
Most states follow this same three-year rule of thumb, but some have longer statutes of limitations. Here's how some states differ from IRS rules.
Statutes of Limitations by State
Several state tax authorities share similar statutes of limitations as the IRS, but with differences in the details.
Taxes must be assessed within three years after the latest of these three dates in Kansas.
- The date the original return is filed
- The date the original return is due
- The date the tax due on the return is paid
An assessment means that the tax authority can review or audit the return and add additional taxes due when and if mistakes are uncovered.
Taxes can also be assessed in Kansas up to one year after an amended return is filed if it's filed later than the dates above.
Louisiana and New Mexico
Like the IRS, these states give themselves three years to audit returns and assess additional taxes due. However, unlike the IRS, this period begins on December 31 of the year for which the tax is due.
Minnesota's statute of limitations is three and a half years from the date a return is filed or the date the return is due, whichever is later.
Oregon's statute is three years after the return is filed, regardless of whether it's filed on or after the due date. So if the return is filed earlier than April 15, the limitations period will end earlier, as well.
This state normally has three years from December 31 of the year in which the return was filed to assess taxes. That limitation can be extended by up to two years if there are certain revisions made to your taxes after the initial filing.
States With a Four-Year Statute of Limitations
The following states give themselves four years after a return is filed or required to be filed, whichever date is later. For example, if your return is due April 15, but you file in February, the clock begins ticking on April 15.
These states allow for certain exceptions. For example, an exception can exist if you request an extension of time to file your federal tax return.
Other exceptions apply to certain types of income and tax liabilities.
How Long States Have to Collect Taxes Due
Keep in mind, these deadlines relate to the amount of time a state has to get around to auditing a tax return and assessing any additional taxes due. They generally have longer—sometimes much longer—to collect any tax that you owe according to your initial tax return.
The statute of limitations for the federal government to collect tax debts is 10 years. This deadline applies to tax returns that were filed where taxes were due, but where the taxes have not yet been paid.
Several states mirror this deadline, but some have much longer, and some have less time to initiate collection actions.
California and Illinois, for example, have 20 years to initiate collections. It's also 20 years for the state to impose a tax lien in Missouri.
Some states have shorter statutes of limitations. In Iowa, it's three years—but only if you filed a tax return. It's also only three years in Utah, as well as in Nebraska (unless a Notice of State Tax Lien is recorded with the government).
What Affects the Statute of Limitations
The statute of limitations might not cover every situation, and every state's statute has its caveats, even those that generally follow the IRS rules.
For example, if you have amended your federal return or the IRS adjusted your return, the statute of limitations for your state tax return might also restart.
Signing any type of payment agreement or offer in compromise with the state or the federal government can also reset the state statute of limitations.
The statute of limitations does not apply to fraud or tax evasion. Federal law also extends the statutes under these circumstances. There is no statute of limitations for civil tax fraud.
You Must File Tax Returns to Start the Clock
The deadlines discussed in this piece apply to tax returns that were filed but were never paid. But what happens if no tax return was ever filed?
In this case, the IRS can successfully argue that, because no tax return was filed, the statute of limitations was never started (and therefore never ended), and there is no time limit for the IRS to take action on that year.
In the court case Beeler v. Commissioner, a man was held liable for payroll taxes that were determined to have been due 30 years ago.
If you missed a return for a tax year, keep those tax records on hand, and file those taxes—the sooner the better.
The information contained in this article is not tax or legal advice and is not a substitute for such advice. State and federal laws change frequently, and the information in this article may not reflect your own state’s laws or the most recent changes to the law. For current tax or legal advice, please consult with an accountant or an attorney.