Statute of Limitations To Collect Tax

There are several different statutes of limitations dealing with the processing and collection of federal taxes.  The most important one for most people is the ten year statute of limitations on collection of taxes that have been assessed.  This means the IRS has ten years to collect your taxes from the time they were registered in the IRS computers, not from when due.  Thus, if you filed your 1999 taxes in 2001, the ten years would not be up yet.

 

 

Also, there are several events that can extend the statute, such as filing an Offer In Compromise or filing bankruptcy.  In addition, many of my clients have entered into an Installment Agreement before coming to me and have signed a waiver extending the statute without realizing it.  I can determine when the statute began to run for any year and when it will expire by looking at the taxpayer’s record of account for that year.

It should also be noted that if the IRS files a return for you (called a Substitute For Return) as if often does, this will not start the statute running.  You must file the return yourself to begin the statute running.  Therefore one should always file all returns, even if payment is not included with the return.  This will at least put a limit on the amount of time the IRS can collect the tax.