Is There a Statute of Limitations for Collecting Back Taxes?
If you have been wondering whether there are limits to how far back the IRS can look to collect taxes that you owe, the short answer is YES. The IRS has 10 years to collect any back taxes that you owe. After that time, the IRS can no longer come after you for this debt. However, there are a couple of things to keep in mind about this timeframe:
- The 10 years is measured from the time that the tax liability (debt) is finalized. How do you know when the debt has been finalized? It can be considered finalized in one of two ways. The first is when you report it on your tax return. The second is when the IRS has charged you an additional tax as a result of an audit.
- The IRS has a full 10 years from the date the debt is finalized to collect not only the tax debt, but also fees, interest and penalties. This can really add up and the IRS is very unlikely to forget about your debt.
- If the 10 year mark passes and the IRS has not collected any portion of the debt, interest or penalties, it is automatically erased. The statute of limitations for collecting back taxes expires one day after the 10 year mark.
Exceptions: As with most things, there are a few exceptions to this rule. If the IRS is reviewing a request for an offer in compromise, installment agreement, or innocent spouse relief, then the 10 year statute of limitation is suspended. In addition, when a taxpayer is under a stay of bankruptcy, or if the taxpayer has lived outside of the U.S. for at least 6 months, the 10 year statute of limitations is not valid.
Other Important Statues to Be Aware Of
It is also important to understand the other timeframe guidelines that the IRS imposes. First, in most cases, you have 3 full years to claim a refund from the IRS. Similarly, the IRS has 3 full years to decide to audit your tax return and assess additional taxes over and above what has been originally reported on your return. As with the statute of limitations for collecting back taxes, there are always exceptions to every rule and you should make sure to consult with a tax professional or the IRS website to be sure that you know how your unique situation may (or may not) fall into the rules and guidelines set by the IRS.
Success Tax Relief: Helping Clients Sort Through Complex Tax Code
Taxes, deadlines and statutes of limitations can be complex and difficult to understand and there are times when taxpayers need help understanding how best to proceed given their unique situations. If you’re are worried that you may owe back taxes to the IRS or need help resolving your tax debt, we can evaluate your situation and give you professional advice on how to move forward. We can even communicate with the IRS on your behalf. So if you’re ready to start managing your debt to the IRS and finally find some relief, contact Success Tax Relief today.