What is the period of limitations for a tax return?
Short answer
The period of limitations is the time the IRS has to assess more tax, and the taxpayer has to claim a refund, for a return: usually three years. It sets record retention.
What it is
For most returns the period is three years from the date the return was filed or its due date, whichever is later. It extends to six years if the return omitted more than 25% of gross income, and there is no limit for a fraudulent return or when no return was filed. Refund claims generally must be made within three years of filing or two years of payment.
Record retention follows the period: the IRS says to keep records that support an item on the return until the period of limitations for that return runs out, with longer rules for property, employment taxes and worthless securities.
Why it matters for a tax firm
The "keep everything seven years" habit is a rule of thumb, not the rule. The period of limitations tells a firm when a client file can go, and why a file supporting a property basis has to stay far longer.
Related terms
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Sources
Questions about Period of limitations
How long does the IRS have to audit a return?
Generally three years from the filing date or due date, six years for a substantial understatement of income, and without limit for fraud or an unfiled return.
How long should a firm keep client files?
At least as long as the period of limitations for each return, longer for records that support property basis or carryforwards, and as long as your state board or the firm's policy requires.
Last reviewed: October 16, 2026. This glossary explains terms; it is not legal or tax advice. Check the cited source for the current rule.
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