Dealing with the IRS can feel like you’re in a labyrinth, where every turn brings a new complex rule or deadline. The possibility of an audit can be scary, or an unexpected tax bill can cause anxiety.
Even so, understanding the IRS’s statute of limitations can be your guiding light.
What Is a Statute of Limitations?
A statute of limitations is a law that sets a deadline for starting legal action after an event. Its purpose is to ensure fair legal proceedings are available to the taxpayer. The IRS has different statute of limitation.
The IRS operates under various statute of limitations:
- The Assessment Statute Expiration Date (ASED): The IRS has three years from the date of your tax return filing to assess taxes owed. Certain circumstances, like bankruptcy or failure to file, can extend this period.
- Refund Statute Expiration Date (RSED): Taxpayers have three years from the tax return due date or two years from the date taxes were paid to claim a refund for overpaid taxes. After this period, you can’t claim a tax refund.
- Collection Statute Expiration Date (CSED): The IRS typically has 10 years to collect unpaid taxes, interest, and penalties. This period starts after taxes are assessed, and the return is filed.
10-Year Statute of Limitations for Tax Debt Collections
The IRS has 10 years to collect unpaid taxes related to interest and penalties, which is called CSED. After these 10 years, you’ll be completely free of your tax debt. Check the article, if you want to calculate your IRS CSED.
Attention: To start a 10-year statute of limitations, you have to owe taxes and file your tax return.
Don’t you think that you can easily get rid of your tax liability by only waiting 10 years? The IRS has many methods to collect tax debts. If you prefer to wait, you may find yourself in some uncomfortable situations, such as wage garnishments or bank levies. That’s why you might want to look into other tax forgiveness options, like an Offer in Compromise. You just need to know if you’re qualified or not for tax forgiveness.
To find the best solution to resolve your tax situation and finalize the most appropriate way based on your financial situation, you can consult an expert in negotiating with the IRS.
Feeling Overwhelmed?
What are the Exceptions to 10-Year?
While the IRS generally forgives tax debt after 10 years, certain events can extend this period, such as:
- Bankruptcy
- Appeal requests
- Offer in Compromise
- Innocent spouse relief
- Taxpayer Assistance Order (TAO)
- Voluntary waiver of the statute of limitations
- Collection due process appeal
The IRS may temporarily suspend the statute of limitations to review and decide on specific actions. Therefore, any suspension can prolong your CSED for additional months. For instance, since a hearing is mandatory in bankruptcy cases, CSED is automatically suspended and extended for an additional 6 months. Filing an Offer in Compromise tolls the CSED the number of days the offer is pending plus an additional 30 days to appeal an offer rejection.
Are state taxes and federal taxes same?
State tax regulations differ from federal taxes, so you should be aware of your state’s statute of limitations. If it seems complicated, no matter which state you live in, Precision Tax Relief can help you.
Consider these details:
- The IRS can audit returns filed within the last three years, or up to six years in cases of suspected errors or fraud.
- Ignoring tax debts and waiting until the deadline isn’t a safe way to get rid of taxes because the IRS collection statute of limitations can exceed 10 years in certain circumstances, such as bankruptcy proceedings. Moreover, if you file a false tax return, there is no time limit for the IRS to take action against you.
- After your statute of limitations has expired, the IRS can no longer try and collect on an IRS balance due. Besides, it’s necessary for you to confirm yourself that it has indeed lapsed. To do this, you should contact the IRS. Although the IRS sends numerous notices for overdue tax debts, it rarely sends a notification for this specific situation.
If you want to get rid of your tax obligation in a stress-free way, call us now.
