I think about this every year at tax time. When do I know I’m in the clear? I know that the IRS technically has X years to audit my return (except in the case where fraud is suspected) but for all practical purposes how soon after the filing are you notified by the IRS that there are issues with your return? Is it common that right now they’d be auditing 2002 or 2001 returns, or would the bulk of their work be with 2003?
Does the receipt of a refund check signify anything, or is the acceptance of tax payments / issuance of refunds completely separate from the audit process?
I am not an accountant or a tax expert…just a ‘Joe Taxpayer ‘ like you. That said, in my experience, and it happened twice…3 years after the filing. In both instances, it was failure to report winnings on an Atlantic City slot machine win. I was charged interest on the amounts I didn’t report, from the day of filing (3 years ago). The accompanying letter was ‘nice’ to a fault. Lots of please’s and thank yous, and have a nice day sort of stuff. Underlying message…ya fucked up…send us money now!
Your second question. You could claim a refund of thousands over what your true refund was. As long as your math looked and added up kosher, they’ll probably send it. But, expect that letter 3 years from now…with interest tacked on to your ‘mistake’. I think they go over your return with a fine tooth comb later on…not during the initial filing period.