Can The IRS Collect Tax Debt After 10 Years?
If you are in a position of owing a tax bill to the Internal Revenue Service (IRS), you may wonder if you will ever get this monkey off of your back, so to speak. As a general rule, the IRS cannot collect back taxes forever—they have a maximum of 10 years to collect back taxes from a taxpayer. There is a 10-year statute of limitations on any tax debt, so after that time, the IRS must stop the collections process.
Details of Extending The Limitations Period
If you are trying to calculate the exact date of the 10-year period, you should begin with the date of the actual IRS tax assessment. So, if you fail to pay taxes on time but file a return, you will receive a letter from the IRS (called a “written notice”) and the date of that first letter is the date that the 10-year clock starts. If you do not file a return or pay your taxes, then the IRS will create a substitute return for you and what is called a deficiency assessment, which also will start the 10-year clock.
You should keep in mind that there are occasional instances in which this time period can exceed 10 years. The IRS will automatically stop the clock during the decade if you declare bankruptcy, if you live outside of the United States for more than six months, or if you request an installment agreement or offer in compromise to settle your debt. As the 10-year period comes to an end, you will likely receive more communication from the IRS, but you will not be threatened or pressured.
Options for Resolving Your Tax Debt
Your unpaid tax balance is subject to interest that compounds daily as well as a monthly late payment penalty. Over the course of a decade, interest and penalties can really add a significant sum to your back tax balance. Paying the IRS as soon as possible is always in your best interest and there are options for settling your tax debt. An installment agreement allows you to pay your back taxes (and interest and penalties) over time, similar to a credit card payment. An offer in compromise is an agreement between a taxpayer and the IRS for payment of an amount lower than the original debt.
Help Solving Complex Tax Problems
If you owe back taxes to the IRS and are unsure how best to solve your specific tax issues, you may want to consider partnering with a tax firm that can help. Success Tax Relief can review your tax returns, and walk you through your options for paying your taxes. In addition, if the IRS has been in touch with you about back taxes, our team can take the stress away and communicate directly with the IRS to help settle your tax issue. Tax relief is just a phone call away. We can help you find a solution even with the most complex tax problems. Call Success Tax Relief at 877-825-1179 for more information, or contact us online.