Tax Season Is Over — But Is Your Tax Risk?

Most taxpayers file before the April 15 deadline and then consider the matter closed until the IRS comes back asking questions. That assumption is one of the more expensive mistakes a CPA in Queens sees repeatedly.

From the due date, the IRS has three years to review, request documentation, or flag inconsistencies. New York State also has a three-year review period, but it runs on its own independent schedule and is not tied to the IRS’s timeframe. A taxpayer could receive an IRS notice and a state inquiry at the same time, but each agency conducts its review separately and on its own timeline.

Understanding how those timelines work is the difference between being prepared and being caught off guard.

The IRS Three-Year Audit Window (ASED)

The Assessment Statute Expiration Date (ASED) is the legal deadline after which the IRS can no longer audit your return or collect additional taxes. For most taxpayers, this window is three years and starts on April 15, the federal filing deadline, regardless of when the return was actually submitted.

If you filed early, such as in February, the three-year window still begins on April 15. However, for taxpayers who file after the deadline, the clock starts on the date the IRS receives the return.

IRS’s 26-Month Internal Guideline

The law allows three years for review and audit, but the IRS typically works within a tighter internal window. Its internal operations handbook requires agents to start and complete audits within 26 months of the filing date. This leaves enough time before the legal deadline to process appeals and final paperwork as needed.

Within the 26-month window, the IRS may contact a taxpayer, but that is not guaranteed. Additionally, the internal guidelines do not carry legal weight. They offer no protection, and taxpayers cannot use them in any dispute. If an agent exceeds the 26-month mark, the audit continues until the three-year ASED period expires.

When the IRS Audit Window Extends to Six Years

By law, the standard three-year window can be extended to six years under specific conditions. These conditions include:

• Substantial Understatement of Income: Taxpayers who omit more than 25% of their gross income automatically extend the statute of limitations to 6 years.

For example, reporting just $75,000 of income out of a $100,000 income triggers a longer window.

• Unreported Foreign Income: Some taxpayers in Queens with financial ties abroad miss this rule. Failing to report more than $5,000 in income from foreign financial assets triggers the six-year audit window.

In extreme cases, such as fraud, deliberate noncompliance, or an unsigned return, the audit window lasts longer than six years and never expires.

New York State Tax Audits Have a Separate Clock and Risk

The IRS and the New York Department of Taxation and Finance operate independently. Filing a federal return is separate from fulfilling state compliance, and one agency’s closure does not mean the other will overlook issues.

New York State Runs Its Own Three-Year Audit Window

The three-year statute of limitations applies at both the IRS and New York State levels, but each clock runs completely separately. If your federal ASED expires in April 2029, this does not automatically confer protection or matching closure at the state level. The New York statute could still be active for state review.

This means New York can review the same return independently and on its own timeline. As with the IRS, the review period may extend to six years if income is understated by more than 25%. If no return is filed, New York State has no time limit.

When the IRS Changes Your Return, New York State Needs to Know

If the IRS adjusts a federal return, New York State requires taxpayers to notify the DTF separately. New York does not automatically receive IRS updates and expects taxpayers to inform them, as required by law.

The IRS gives taxpayers a 90-day deadline from the date it finalises an adjustment, not from when the taxpayer receives the notice. If taxpayers miss that window, the New York State DTF can independently assess the deficiency, add penalties, and proceed directly to collection.

This is one of the most commonly missed obligations ETCPA sees after a federal audit closes. For taxpayers in Queens and across New York City, both agencies may become involved. The federal matter may be resolved, but the state obligation remains outstanding, and taxpayers must meet it.

New York’s Domicile Audits

Residency audits in New York are among the most detailed in the country. The Department of Taxation and Finance scrutinises whether a taxpayer who claims to have left New York actually meets the legal definition of a domicile change.

Auditors review everything from travel records to financial account locations, club memberships, and even where a taxpayer’s family members live. High-income taxpayers in Queens who have relocated or split time between states are often subject to this level of review.

As stated earlier, a return that appears flawless may be complex at the state level, especially if residency documentation is incomplete.

What if I Made a Mistake While Filing a Return? OR Filed Your Taxes and Found a Mistake? Here Is What to Do

In the weeks after April 15, ETCPA often helps clients who discover an error after filing. The resulting panic is understandable, but the situation is almost always manageable, clean, and smooth.

The first thing to determine is whether the mistake actually requires any action.

Not Every Mistake Requires an Amended Return

The IRS recognises that mistakes are sometimes unavoidable and automatically corrects certain errors during processing. The agency usually reviews and adjusts minor calculation mistakes, math errors, and missing schedules without any action from the taxpayer.

Significant changes require a formal amended return, issued by the IRS. Errors with income, deductions, credits, dependents, filing status, or tax liability compel the IRS to contact the taxpayer promptly.

Understanding the difference between these cases is important because filing an unnecessary amended return adds processing time and exposes the return to a second review. ETCPA advises clients to confirm whether they actually need a correction before filing anything.

Form 1040-X: When a Formal Amendment Is Required

When a taxpayer files a return, they either owe the IRS money or the IRS owes a refund. Mistakes happen either way, and Form 1040-X is the formal amendment document used to correct them.

Taxpayers file and submit Form 1040-X to the IRS when they need to correct a substantive mistake in the original filed return. This form does not supplement the preceding return; it replaces it entirely.

This means the IRS replaces the first filing with the 1040-X, which becomes the official return for that year.

Electronic filing is faster, and you can submit Form 1040-X for returns from 2021 onward electronically. Processing the paper version can take up to sixteen weeks, roughly four months.

The Deadline to Amend and Still Claim a Refund

Just as the IRS has an Assessment Statute Expiration Date (ASED), taxpayers filing a 1040-X form have a Refund Statute Expiration Date (RSED).

If the IRS owes you a refund, you have three years from the earliest due date of the return to file an amended return and still receive the refund. So for a 2026 return due April 15, 2027, the three-year window to file a Form 1040-X and claim a refund expires on April 15, 2030. There is a second rule that says taxpayers have two years from the date the tax was actually paid to request a refund, to protect people who pay their taxes late.

One detail that catches taxpayers off guard: if the amendment shows that a taxpayer owes more money than was originally paid, the IRS calculates interest from the first April 15 deadline of the filing year, not from the date the amendment is submitted.

The longer a taxpayer waits to fix the mistake, the more interest has already accrued by the time they file. Filing promptly after discovering an error reduces that exposure.

Special rules apply to net operating losses, foreign tax credits, and bad-debt deductions. Those situations carry different deadlines and are worth reviewing with a CPA before assuming the standard three-year window applies.

What New York State Filers Need to Know About Form 1040-X

New York runs its own amendment process on its own timeline, and a change to a federal return does not automatically update a New York State filing. Taxpayers must contact the New York State Department of Taxation and Finance separately to correct a state return.

Many taxpayers who amend their federal return and think they have resolved the matter forget this step. For Queens residents and New York City business owners, failing to correct the state return after a federal amendment can result in a separate state notice months later.

IRS Notices After Filing: What to Watch for in Your Mailbox

Receiving an IRS notice in the mail after filing does not always mean an audit will follow. However, every notice comes with a deadline, and missing any response window makes resolution harder. The response clock starts on the date listed on the notice, not the day it is received.

CP2000 — Income Mismatch Notice

The CP2000 is the most common notice taxpayers receive after filing, and the first thing to know is that it is not an audit but a proposed adjustment. The IRS runs an automated check that compares submitted returns with third-party income documents, and when something does not line up, a CP2000 is issued. Taxpayers have 30 days from the notice date to respond.

CP14 — Balance Due Notice

A CP14 means the IRS has processed the return and shows an unpaid balance. In this case, penalties and interest are already running. ETCPA sees this regularly among Queens taxpayers who mailed a payment near the deadline and assumed it went through. A check in the mail is not a confirmed payment until the IRS processes it.

CP501, CP503, CP504

After officially assessing a tax debt and the taxpayer has not paid, the IRS sends these three notices, depending on the circumstances. CP501 is a notice. CP503 means the IRS has not heard back from the taxpayer. CP504 is the last notice before the agency moves to levy assets and state refunds.

Audit Notification Letters

This is different from a CP2000. An audit letter means a human examiner has flagged a discrepancy and selected the return for review. In New York, receiving one without professional guidance is a risk. The first response sets the tone for everything that follows.

How ETCPA Monitors Post-Filing Activity

For most taxpayers, the relationship with a tax preparer ends on April 15. At ETCPA, year-round work from its Forest Hills office and post-filing support are standard parts of every client relationship.

When a notice arrives in the mail, the wrong move is responding before understanding what the IRS is asking. ETCPA reads it, explains it in simple language, and handles the response. Clients do not have to figure that out alone. For business owners waiting on late K-1 forms, the firm tracks those situations and flags when an amended return is needed before it becomes a problem.

ETCPA serves taxpayers in Queens and Manhattan in both English and Spanish.

Final Takeaway

Filing a return closes the April deadline but does not close the IRS’s review window. Taxpayers who filed in 2026 and have not reviewed their return since April can call ETCPA before the IRS does.

Call +1 718-261-9600 or email file@etcpa.com. ETCPA serves clients in English and Spanish from its Forest Hills and Manhattan Offices.