IRS Tax Statute Of Limitations Tips & Tricks

The Internal Revenue Service is able to collect unpaid taxes for up to 10 years. This however does not include fraud. There is no statute of limitation on any kind of tax fraud that involved the IRS. There are a few things that you need to understand about the 10 year rule that could help you in case the IRS begins to pursue you for unpaid taxes.

Tax Statute Of Limitations

The day that the IRS assesses your tax amount is the day the 10 years statute of limitation begins. The IRS is allowed up to 10 years from this date to pursue you for the tax it says you owe them. This does not necessarily mean that your assessed date is the day you mail in your tax return or April 15th. It could be a date much farther in the future from that date depending on when the IRS processes your return.

In some cases the 10 year statute of limitation could be reset or put on hold below I will discuss those scenarios.

Multiple Statute Of Limitations

You can have multiple 10 year statute of limitation commence on a single tax return if the IRS assesses you additional taxes. The date that additional tax is assessed will be the start date of an additional 10 year statute of limitations only on the additional tax. The original 10 year statute of limitation will still be the same for the original tax assessment.

If you agree to an installment agreement where you can pay your taxes over a period of time instead of all at once the IRS may have you sign a Tax Collection Waiver (Form 900). This form will extend the amount of time the IRS is able to collect on taxes you owe them past the 10 year limitation.

Submitting an Offer in Compromise

If you submit an offer in compromise, the time that the IRS is considering whether to accept your application is not a part of the 10 year statute of limitation. An offer in compromise is a program the IRS offers taxpayers to pay less than the amount they owe in a lump sum fashion. After you submit your application the clock will stock on your 10 year statute of limitation until it is either accepted or rejected.

During a bankruptcy preceding the clock does not run on the 10 year statute of limitation. If the bankruptcy does not wipe out the taxes owed to the IRS the clock will begin after the bankruptcy is finished.

About Paul Gaulkin CPA

Paul Gaulkin is a Certified Public Accountant and enrolled with the U.S. Treasury to practice before the IRS. Mr. Gaulkin possesses unique technical knowledge in the process of securing relief for taxpayers nationwide with IRS and State tax problems. With an accounting degree from Florida International University, he is able to transform complex tax and accounting problems into easy to understand solutions.


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