What is the general statute of limitations for assessment, and what are common exceptions?

• A. Generally five years from the return due date; exceptions include fraud.
• B. Generally three years from the return due date or filing date; exceptions include substantial omissions, no time limit for fraud or failure to file.
• C. No time limit for any assessment.
• D. Ten years from the tax year end.

Answer: (B)

The main idea here is how long the tax authority has to assess additional tax. The general rule is a three-year window from the return’s due date or the date the return is filed, whichever is later. This means the clock starts when the return is due (if filed on time) or when it’s actually filed, and it runs for three years unless a special exception applies.

Common exceptions include extending that window. If you omit 25% or more of your gross income, the period extends to six years. There is no time limit at all for fraud or for failing to file a return—the IRS can assess taxes in those cases regardless of how long has passed. These carve-outs explain why the three-year rule isn’t the end of the story in every situation.