In general, the Internal Revenue Service (IRS) has 10 years to collect unpaid tax debt. After that, the debt is erased from your books and the IRS cancels it. This is called a 10-year statute of limitations. It is not in the financial interest of the IRS to make this statute widely known.
In a nutshell, the statute of limitations for federal tax debt is 10 years from the date the taxes were assessed. This means that the IRS must forgive the tax debt after 10 years. However, there are a few things to consider. Generally speaking, the Internal Revenue Service has a maximum of ten years to collect unpaid taxes.
Once that time has elapsed, the obligation is completely erased and removed from the taxpayer's account. This is considered a “cancellation”. The ten-year period is recognized as a statute of limitations on fiscal balances or an expiration date of the collection statute, commonly known as CSED. Taxpayers can't easily identify this limitation because it's not in the best interest of the IRS to cancel a liability.
Your ten-year term begins when you file your tax returns and owe taxes. The IRS has three years from the date you file a tax return to evaluate any additional taxes that could result in IRS liability. They don't make the ten-year limit understandable to taxpayers for fear that the taxpayer will simply wait for time to pass. If you're choosing to delay collection and “wait for the deadline to pass,” you'll want to be prepared for the Internal Revenue Service's collection tactics to get tough.
When the time for your CSED approaches, the Internal Revenue Service will become more aggressive in its actions. Aggressive actions may include filing tax liens or issuing a tax lien on your bank accounts or salaries. The quickest tactic to prevent collections from occurring is to accept payment plans established by the Internal Revenue Service, also known as an installment agreement. Before deciding to take any matter into your own hands with the Internal Revenue Service, you should consult tax professionals who are experts trained in negotiating with the IRS regarding tax liability and the provision of tax breaks.
As a general rule, there is a ten-year statute of limitations for IRS collections. This means that the IRS can attempt to collect outstanding taxes for up to ten years from the date they were assessed. Subject to some important exceptions, after the ten years have elapsed, the IRS must stop its collection efforts. Every year, the statute of limitations expires for thousands of taxpayers who owe money to the IRS.
However, your tax list could be left clean if your situation meets certain guidelines. For example, the IRS, by law, cannot collect a debt for more than a decade. If you have owed this money for at least 10 years or more, your back taxes should be forgiven because the government cannot legally collect that amount. You have been audited by the Internal Revenue Service (IRS) and it has been determined that you owe money to the government.
So, you might be thinking that you are now on the debt hook for good. However, that's not exactly the case. Although not widely shared by the IRS, every IRS audit tax debt has a collection law expiration date (CSED). Generally speaking, the IRS has 10 years to collect an unpaid tax debt, after which the debt is canceled.
Towards the end of the CSED, the IRS tends to be more aggressive in its collection efforts, hoping that the taxpayer will pay as much as possible before the deadline or agree to extend it. In addition to the reduction and possible elimination of collection requests, the IRS will not contact a tax debtor once the CSED has been approved. The tax settlement date is the date you'll find on the document that serves as a Notice of Deficiency, and is the date on which the IRS agent who discovered your debt for the first time filed the appropriate form. However, this state in some cases exhausts the proverbial time that the IRS can collect the debt.
If you've been struggling to pay a tax debt for a significant period of time and you think your collection period is coming to an end, it's best for you to contact a tax professional and reasonably explore your options. This is left to the person or their tax professional, in addition to requesting the necessary documentation to prove that the debt no longer exists. If you owe back taxes, you could avoid paying the amount in full by taking advantage of one of these IRS tax debt relief options. To lighten its own workload and offer taxpayers a little mercy, the IRS is willing in some cases to give up its right to a debt.
As long as the IRS cannot currently collect any payments from you, and as long as you contact the IRS and wait for them to deliberate on your offer of a payment plan (OIC), the 10-year period for paying your tax debt will be stopped. The two most powerful weapons available to the IRS to coerce the payment of tax debts that exceed a certain limit are the federal tax levy and, finally, taxes on your accounts, salaries and certain assets. During the consultation, a debtor and a tax professional can together understand the scope of the tax problem, analyze the available options, and determine the best way to resolve the issue. While it's supposed to start when the tax is originally evaluated, the CSED is the subject of frequent disputes between taxpayers and the IRS.
Similarly, the IRS generally won't collect a debt that has a low realistic collection potential (RCP). One way to avoid this is to address the start date with the IRS immediately after notification of an outstanding tax balance. . .
