No one wants to hear from the IRS, especially after already going through an audit. But just because you’ve been audited once doesn’t mean it’s the last time. Understanding how often the IRS can audit you — and why it might happen again — is key to protecting your business. Working closely with a trusted tax professional can make a big difference in minimizing your audit risk and navigating any future IRS inquiries with confidence. In this guide, we’ll walk you through when repeat audits can happen, how long the IRS can look back at your taxes, and smart steps you can take to lower your chances of facing another audit. Let’s get started so you can stay ahead and stay prepared.
If You’re Audited Once, Can It Happen Again?
Getting audited once doesn’t mean you’re completely safe in the future. In fact, it’s very possible for the IRS to audit you again in the following years. While tax laws are designed to protect taxpayers from being unfairly examined too many times, repeat audits can still happen under certain conditions.
Rules are in place to make sure the IRS doesn’t repeatedly check a taxpayer’s records without good reason. Generally, the IRS is allowed to inspect a person’s financial records only once for a particular tax year. A second inspection can happen, but only if you ask for it yourself or if the IRS sends you a written notice explaining why another look is necessary.
If your tax returns have issues that catch the IRS’s attention—known as red flags—you are more likely to face another audit. Keep reading to learn about the common red flags that could put your returns at risk.
How Far Back Can the IRS Audit Your Taxes?
If you’re asking yourself, “How many years can I be audited for taxes?” the answer might surprise you. There is actually no limit to the number of audits you could face over your lifetime, especially if you run a business. How often you get audited really depends on your personal or business situation.
Certain activities, like making frequent errors on your tax returns, underreporting income, or claiming large deductions without proper proof, can increase the chance of being audited more than once. Every year is treated separately by the IRS, which means even if you were audited before, you could be audited again in future years if they find a reason.
Staying organized and filing honest, accurate returns each year is the best way to lower your chances of dealing with repeated audits.
What to Expect If You Face IRS Audits Over Multiple Years
Being audited by the IRS year after year can feel overwhelming, but it can happen—especially if similar issues keep popping up on your returns. For example, if someone is audited for their 2016 and 2017 tax returns and then faces an audit again for 2018 over the same matter (not related to their small business), it raises the question: can the IRS keep auditing the same problem?
The answer is yes, but there are ways to challenge it. If you’re audited repeatedly for the same issue with little or no changes found in past audits, you may be able to ask the IRS to stop the new audit based on their “repetitive audit policy.” This policy helps protect taxpayers from being audited multiple times for the same reasons without good cause.
Small Business Tax Audit: What Steps Should You Take?
Once you receive an IRS notice saying you are being audited again, there are a few important steps you should take right away. First, you can request that the IRS stop the audit by using the contact details provided in the notice. In your request, you should clearly mention the IRS’ repetitive audit policy.
Be prepared—the IRS will likely ask you to send in certain documents to review your situation, including:
- A copy of the audit report or no-change letter from the previous audit.
- Proof of where you filed your earlier returns.
- Proof of where the IRS completed the prior examinations.
If you send this information before your first scheduled meeting with the IRS examiner, the agency usually decides whether the repetitive audit policy applies before moving forward with any discussions.
Facing an audit alone can feel stressful, but you don’t have to handle it by yourself. Getting professional help can make a big difference, especially when it comes to protecting your small business and easing the pressure of dealing with the IRS.
Top Tips to Minimize Your Risk of an IRS Audit
No one wants to deal with an IRS audit, especially not year after year. While you can’t guarantee you’ll never be audited, you can take steps to lower your chances. The IRS often looks for certain warning signs—also called red flags—that might trigger an audit. If you can steer clear of these, you may greatly reduce the risk of being audited multiple times.
Here are some common triggers you should try to avoid:
- Reporting income that doesn’t match the figures reported on your W-2s, 1099s, or other payee statements. Even small differences can attract attention.
- Claiming deductions on your business tax return that seem very large compared to your total income. The IRS may wonder if the numbers are accurate.
- Running a cash-based business and reporting a big net loss on a Schedule C. Since cash businesses are harder to track, they are often watched more closely.
- Making non-cash charitable donations worth more than $500, especially if the amount seems high compared to your overall taxable income.
- Showing business losses for several years in a row. If your business keeps losing money, the IRS might question whether it’s really a business or just a hobby.
- Taking large deductions for things like car expenses, meals, entertainment, and travel costs, particularly if those expenses seem unusually high for your type of business or profession.
Keeping detailed records, reporting your income accurately, and making sure your deductions are reasonable can go a long way toward staying off the IRS’s radar. A little extra care when preparing your return can save you a lot of trouble later.
Why You Should Work with a Tax Professional During an Audit?
Handling an IRS audit on your own can be overwhelming. That’s why it’s smarter—and far less stressful—to work with a tax professional who knows exactly how to deal with audits and small business taxes. However, it’s important to remember that not every tax pro offers the same level of expertise. Before choosing someone to help you, take the time to ask specific questions about their experience, especially with audits and tax resolution.
When you’re looking for expert support, trust a team that truly understands the process. At Austin & Larson Tax Resolution, our team of experienced tax pros and attorneys is ready to stand by your side. We specialize in helping individuals and small business owners manage audits, settle tax debts, and protect their financial futures.
Unlike general tax preparation services, we focus on solving complex tax problems and offer year-round support tailored to your unique situation. With seasoned professionals guiding you, you can move through the audit process with more confidence and peace of mind.
Partner with Austin & Larson Tax Resolution today and get the experienced help you deserve when facing the IRS.
Conclusion
Facing one IRS audit can feel overwhelming—but it doesn’t mean it’s the last. Businesses can be audited multiple times, especially if red flags continue to appear in your tax filings. Staying organized, filing accurate returns, and understanding your rights—like the IRS’s repetitive audit policy—can help protect your business from repeated scrutiny. Remember, preparation is key. Respond promptly to any IRS notices, maintain thorough records, and seek professional guidance if needed. Working with experienced tax professionals can not only help you survive an audit but also strengthen your defenses for the future. Don’t wait until the IRS comes knocking again. Proactively improve your tax practices today and secure peace of mind for your business tomorrow. If you’re facing an audit—or want to audit-proof your business before it happens—reach out to trusted experts who specialize in helping small business owners just like you.
Disclaimer: The information provided in this blog is for general informational purposes only and should not be construed as legal, financial, or tax advice. Every tax situation is unique, and IRS regulations can change over time. Readers are encouraged to consult with a qualified tax professional, accountant, or attorney regarding their individual circumstances. Austin & Larson Tax Resolution is not responsible for any actions taken based on the content of this article without proper professional guidance.
Frequently Asked Questions
1. Can the IRS audit the same year more than once?
Yes, but only under specific circumstances, such as if the IRS provides a written notice or if the taxpayer requests a second inspection.
2. How often can a small business be audited by the IRS?
There’s no set limit. Businesses can be audited multiple times, especially if their returns show consistent red flags.
3. What triggers repeated IRS audits for businesses?
Common triggers include frequent reporting errors, underreported income, unusually large deductions, and repeated business losses.
4. Can I refuse a second IRS audit?
You may challenge it if the audit is repetitive and concerns the same issues previously reviewed, citing the IRS repetitive audit policy.
5. How far back can the IRS audit my business taxes?
Typically, the IRS looks back three years, but audits can go back up to six years or more if significant errors are found.
6. How can I reduce the risk of multiple IRS audits?
You can reduce your risk by keeping accurate records, filing honest and timely tax returns, avoiding common audit red flags, and working closely with a qualified tax professional who can review your filings for potential issues before you submit them.
7. What happens if the IRS finds errors in multiple years of my returns?
If the IRS discovers consistent errors across several years, they may expand their audit to cover more years, assess additional penalties, and possibly initiate further investigations. It’s important to respond quickly and seek professional help to manage the situation.
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