The clock you are counting on may never have started

Figures relate to tax year 2025-26 (UK) · 2025 (US)

An American in Bristol has not thought about 2017 in years. It feels safely behind her.

Whether it is depends on the statute of limitations, which is the window the IRS has to come back at you. Three years, usually.

However, that window has conditions. Several of them are easy to trip from abroad, and one of them stops the clock starting at all.

Key takeaways

• The statute of limitations is usually three years from filing.
• It runs from the filing date, not the tax year end.
• A return never filed means the clock never started.
• Omitting more than a quarter of your income extends it to six years.
• A missing information form can hold the whole year open.
• The FBAR runs on its own six year clock.
• Collection has a separate ten year window.
• The statute of limitations protects filers, not non-filers.

What is the statute of limitations?

A deadline on the IRS, not on you. It is the period in which they can examine a return and assess more tax. According to IRS guidance on assessment periods, it normally runs three years from the date you filed. Once it expires, that year closes and they cannot reopen it without something exceptional.

It is a shield, but a conditional one.

The conditions are where people come unstuck.

When does the clock start?

On the day you actually file, or the due date if you filed early. So a 2022 return filed in June 2023 runs out in June 2026. Filing early does not start it sooner, because an early return counts as filed on the deadline. Filing late starts it late, which is why procrastination costs more than people expect.

Note the filing date, not the year.

Those two dates are often far apart.

What if you never filed at all?

Then nothing ever starts, and the year stays open indefinitely. This is the single most important point for Americans abroad, because many have simply never filed. A year from 2009 is as open today as last year is. No amount of time passing changes that, and waiting does not help.

Our guide to the streamlined route back covers catching up.

Filing is what starts the protection.

What is the six year rule?

A longer window where you left out a lot of income. If a return omits more than 25% of the gross income that should have been shown, the period doubles to six years. Somebody abroad who reported a salary but forgot a rental property or a business can cross that line without any intent to hide anything.

The test is the size of the gap.

Intent does not come into it.

Does foreign income have its own rule?

It does, and it catches people. Leaving out more than a set amount of income connected with foreign assets can extend the window to six years even where the 25% test is not met. For somebody living in Britain, almost all income is foreign, so this rule bites more often here than it does at home.

Our guide to Form 8938 and FATCA reporting covers the assets.

Living abroad raises the odds of it applying.

Can a missing form hold the year open?

Yes, and this surprises almost everyone. Where you never filed a required international information form, the window for the entire return can stay open until you do. So a forgotten form about a company, a trust or a foreign asset can keep an otherwise innocent year alive indefinitely, long after you assumed it had closed.

Our guide to the delinquent information returns procedure covers the fix.

One form, the whole year.

Which forms do that?

The international ones, broadly. Forms covering foreign companies, partnerships, trusts, gifts and specified foreign assets all sit in that category. They are exactly the forms an American in Britain is most likely to owe and least likely to know about, which is what makes the rule so uncomfortable in practice.

Our guide to Form 5471 categories covers one of them.

Filing the form closes the gap.

A worked example

Take an illustrative example. An American in Glasgow filed every return on time from 2014 onwards.

She also held 30% of a small UK company and never filed the form that reports it.

She assumes 2016 closed long ago. It did not, because the missing form held it open.

So the IRS can still examine that year in full, more than a decade later, over a form that would have reported no extra tax at all.

Three clocks, one taxpayer

Is there a separate FBAR clock?

There is, and it works differently. The window for account reporting penalties runs six years from the date the report was due, whether or not you filed one. So unlike the income tax position, FBAR years do eventually close even for somebody who never reported at all. That is a rare piece of good news for long term non-filers.

Our guide to the FBAR covers the thresholds.

Six years, running from the deadline.

What about collecting tax already assessed?

That is a different clock again, running ten years. Once the IRS properly assesses tax, it has a decade to collect. Living abroad does not pause that period by itself, though events such as bankruptcy or an instalment request can suspend it while the IRS considers them.

Our guide to IRS payment plans from abroad covers collection.

Assessment and collection are separate.

How long do you have to claim a refund?

Three years from filing, or two from payment, whichever ends later. This cuts both ways, because an expat who overpaid through withholding can lose the money simply by filing too late. Many people discover an old refund exists only after the window to claim it has already passed.

Our guide to amending a US return covers claims.

Refund windows close whether you knew or not.

Does an amended return restart it?

Generally no, and that is a common misunderstanding. Amending does not give the IRS a fresh three years over the whole return. There is a narrow rule allowing a short extension where you amend very close to the deadline, but the original filing date still governs the year as a whole.

Amending is safer than people fear.

It does not reopen a closed year.

What does fraud do to the window?

It removes it entirely. A fraudulent return carries no time limit at all, so the IRS can examine that year whenever. The bar is deliberate deception rather than carelessness, and the burden sits with the IRS to prove it. Ordinary mistakes, even expensive ones, do not reach that standard.

Our guide to non-wilful conduct explained covers the distinction.

Most expat cases are nowhere near this.

Can you be asked to extend it?

Yes, and you can decline. During an examination the IRS may ask you to sign an extension so they have longer to finish. Agreeing can be sensible where the alternative is a rushed assessment, but it is a negotiation rather than an obligation, and the scope can often be narrowed.

Our guide to an HMRC enquiry for US filers covers the British parallel.

Take advice before signing one.

Does streamlined filing close old years?

It closes the ones it covers, which is three years of returns and six of account reports. The IRS does not formally examine older years, and in practice leaves them alone, provided the submission is complete and honest. That is the practical attraction of the route for somebody with a long history of not filing.

Our streamlined filing service handles the submission.

In our practice older years rarely resurface afterwards.

Does quiet filing achieve the same thing?

No, and it is riskier than it looks. Posting old returns without using a formal procedure starts the clock on each one, but gives up the penalty protection the procedures offer. It also looks evasive if anybody examines the pattern later, which is the opposite of what people intend.

Our guide to the risks of quiet disclosure covers it.

The protection is worth the formality.

What if you get a notice about an old year?

Check the dates before you check the figures. A notice about a year you believe is closed may simply be wrong, or it may rest on one of the extending rules. Either way the first question is whether they are still allowed to assess, because that answer can end the matter entirely.

Our guide to the CP2000 notice from abroad covers notices.

Never ignore a notice, even an old one.

Does living abroad pause anything?

Not for assessment, which runs the same wherever you live. Some collection periods can be suspended while a taxpayer is outside the country for a long stretch, which occasionally extends the ten year window. So distance does not quietly run the clock down in your favour.

Our guide to state tax after you leave covers the state angle.

Absence is not a defence.

Do the states follow the same rules?

Often not, and several are longer. A state can run four years where the IRS runs three, and some keep a year open until they receive a copy of the federal result. Somebody who left California or New York should check the state position separately rather than assuming it matches.

States set their own periods.

They rarely advertise the difference.

What about HMRC on the same years?

Britain runs its own windows, and they do not line up. The ordinary enquiry window is short, but discovery assessments reach back four, six or twenty years depending on behaviour. So one set of facts can be closed on one side of the Atlantic and open on the other for years.

Our guide to overpayment relief for US filers covers British claims.

Two systems, two sets of deadlines.

How long should you keep records?

Longer than the basic window suggests, because of the forms that hold years open. Six years is a sensible minimum for ordinary records, and anything touching a company, trust or property purchase is worth keeping permanently. The cost of storage is nothing against reconstructing a cost base from memory.

Keep purchase records for as long as you own the asset.

Then keep them six years more.

What closes a year for certain?

A complete return, filed, with every required form attached, and three years passing without a notice. That combination is what actually produces finality. Anything less leaves a thread the IRS can still pull, which is why completeness matters more than being early.

Completeness beats speed every time.

A filed return with a missing form is not finished.

Does the statute of limitations apply to penalties too?

Mostly it does, and the penalty usually follows the tax it relates to. So where a year closes for assessment, the penalties attached to that year close with it. The exceptions are the penalties tied to information forms, which stay available for as long as the form remains unfiled, and the separate account reporting regime.

Penalties rarely outlive the tax they sit on.

But the foreign forms are the exception again.

Does a payment plan change the statute of limitations?

It changes the collection clock rather than the assessment one. Asking for an instalment arrangement suspends collection while the IRS considers the request, and the ten year period extends by that time. So a long negotiation can quietly add months to the period in which they can chase the debt.

Assessment stays untouched by any of this.

Only the collection window moves.

What if the IRS files a return for you?

A substitute return does not start your clock. Where somebody never files, the IRS can prepare its own version from the information it holds and assess tax on that basis. That assessment starts the collection period, but the three year assessment window still never begins, because you never filed anything yourself.

Only a return you file starts the statute of limitations.

So filing late still beats never filing.

So the safest assumption is that a year stays open until you can prove otherwise, form by form.

How to work out whether an old year is closed

1. Find the date you actually filed that year, not the tax year end.
2. Add three years to that date, which is the basic statute of limitations.
3. Check whether more than a quarter of your income was left out.
4. List every foreign company, trust, gift and asset you held.
5. Confirm each required information form was filed for that year.
6. Treat the year as open if any of those forms is missing.
7. Check the FBAR position separately, on its own six year clock.
8. Take advice before signing any request to extend the period.

Mistakes and penalties we see with the statute of limitations

The first is assuming old years expire on their own when no return was ever filed.

The second is forgetting that one missing foreign form holds the whole return open.

The third is leaving a refund claim until after the three year window has shut.

The fourth is signing an extension during an examination without asking what it covers.

How US UK Tax Accountants helps

We work out which of your years are genuinely closed and which only look closed, because the difference usually turns on forms rather than on tax.

Then we close the open ones deliberately, using the procedure that fits rather than posting returns and hoping.

If you are worried about an old year, get in touch before a notice arrives.

Last reviewed 21 October 2026. This article is general information and not personal tax advice, and limitation rules are fact specific.