42-2075. Audit duration; definition


A. An audit of a taxpayer's return or claim for refund shall not exceed two years
from the date of initial audit contact to the issuance of a notice of proposed deficiency
assessment or proposed overpayment, except:


1. An audit of a fraudulent tax return.


2. An audit delayed as the result of the taxpayer's bankruptcy proceeding.


3. An audit in which the department has issued a letter to the taxpayer or the
taxpayer's representative citing the potential imposition of the penalty described in
section 42-1125, subsection C for the taxpayer's failure or refusal to provide
information pursuant to the department's written request.


4. An audit involving proceedings concerning the enforcement or validity of a
subpoena or subpoena duces tecum issued pursuant to section 42-1006, subsection C.


5. An audit involving a proceeding under section 42-2056.


6. An audit where a taxpayer has filed a petition pursuant to section 43-1148, but
only in relation to the effect of the petition request.


7. An audit in which the taxpayer provides a written request to extend the audit
beyond the two-year period. A request for extension under this paragraph is not a
substitute for a waiver of the statute of limitations pursuant to section 42-1104,
subsection B, paragraph 9. However, a waiver of the statute of limitations is considered
to be a written request to extend the audit beyond the two-year period under this
paragraph.


B. This section applies to audits conducted by the department and to joint audits
conducted by the department and cities and towns pursuant to section 42-6005.


C. For the purposes of this section, "initial audit contact" means:


1. For a field audit, the date of the first meeting between the taxpayer or the
taxpayer's representative and a member of the department's audit staff.


2. For a desk or office audit, the date of the first letter to the taxpayer
regarding the audit.