The IRS Statute of Limitations on Back Taxes

IRS Statute of Limitations

This article will help you learn more about the statute of limitations on taxes and a little bit of the exemptions of this IRS provision.

There’s a certain period of time that the IRS can collect your unpaid taxes. It’s really quite a long time until your taxes may be forgiven. In fact, the IRS got 10 years to collect the bills from you. How could you possibly wait for a decade, right?

What is IRS Statute of Limitations?

The IRS collection process includes the statute of limitations. It refers to the maximum period that they can legally collect back taxes from the taxpayer. This ten-year period begins when you file a tax return and it’s officially recorded on the IRS computer database, usually 6 weeks after the date when you last filed a tax return. If you’ve reached this 10-year period all your back taxes, and liens will be forgiven and cannot be collected by the IRS.

It Can Be Extended!

There are certain circumstances that can extend the statute of limitations, one of these is federal bankruptcy. Ideally, when you file a bankruptcy, it stops the running of the statute period. It will only resume after the decision of the bankruptcy is over plus another 6 months.

Further, any tax debt not included in the bankruptcy case will remain and the IRS can resume enforcing its collection once you come out of bankruptcy.

Moreover, there are other reasons that can extend the IRS’ Statute of Limitations:

  • Leaving the country for a period of time
  • Filing for an offer in compromise
  • Military Deferment
  • Signing a Collection Waiver (IRS Form 900 or 2750)
  • It’s really advisable to seek the advice of tax experts before pursuing such actions to guide you on what to do and how to get back to the IRS system in no time.
  • The Common Misconception

Now you know that the back tax expiration is ten years from the date of assessment. The common misconception is that it will be effective 10 years later. This is not really the case. Remember, the IRS begins running the statute of limitations starting from the process date of your tax return on their computer database.

Meanwhile, if you failed to file a tax return and the IRS filed your tax return under 6020b and did a substitute for returns, the same ten-year statute period applies.

They Got a Decade to Collect

We know that the IRS is aggressive in its attempts to collect unpaid taxes. They may place liens, levies and wage garnishments on the taxpayer just to enforce collections. Basically, they have a decade to do this and they know when your statute date comes near. Please be mindful on waivers that they will ask you to sign when you know that your statute period is near expiration. If the IRS feels that there is a great collection potential, they may file a suit for a judgment which will extend the statute period. Perhaps, it’s good to consult a tax professional to help you with it.

I hope that we’ve given you relevant information about the IRS’ Statute of Limitations. One main thing is that you should consider consulting experts about this matter.

Fortunately, Financial Rescue LLC partnered with tax professionals such as attorneys, CPAs and former IRS agents. We extend our help to those who needs tax resolution. Call us now at 1-877-97-33287 for a free consultation.