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Time Limit For Taxes

2009-07-02 by

Today TaxMama hears from James in Arizona with a quick question. “Is there a statute of limitations on collecting back taxes?”

Dear James,

There are several limits – or no limits, depending on how you look at it.

In general, the federal limit (IRS) is 10 years after the tax has been assessed.

But that 10 years can be expanded, if you’ve filed for an offer in compromise, Tax Court petition, bankruptcy… It can start over if you’ve filed an amended return, or if IRS has reassessed the balance due via a correction letter or audit.

It can also be extended if you sign an agreement to give IRS more time to collect. Believe it or not there are times when that is wise.

And there is no statute of limitations if you’ve never filed the tax return at all.

Then there are state limits. Each state has their own rules. In some cases, the statute of limitations can be 30 years – practically an entire adult lifetime for some folks.

What can you do to find out the statute of limitations on your balance due? Easy, call your taxing authority and ask them. They will tell you.

I’ll bet this a lot more than you wanted to know!

And remember, you can find answers to all kinds of questions about tax debt and other tax issues, free. Where? Where else? At TaxMama.com

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# | Posted in Tax Quips | Comments » (1)

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Thomas Avery Blair, EA Says:
July 02nd, 2009 at 07:09 am

Commentary:

Isn't it strange how little the taxpaying public actually knows about tax filing issues? Yet, not a television newscast goes by every week or so before the filing deadline of April 15th explaining the need to file and various other details about extensions, statutes of limitation, etc.

Your advice, of course, and as always, was very sound. But do I dare to mention one more point? The IRS does not (usually) prosecute criminally toward imprisonment of the offender for failure to pay ones' taxes, but it does have the legal right to prosecute for failure to file and does so on a regular basis! I also understand that there are just recently new bills in congress right now to make repeated failure to timely file also a criminal offense, potentially even if ultimately one does not owe the IRS any money? Have you or any of your other "tax nerds" heard anything more about this issue?

Is it not amazing that Enrolled Agents so often find themselves in a position of "teacher" as well as "preacher" about how to remain at all times tax compliant?

At least food for thought, is it not?

Respectfully Presented

Thomas Avery Blair, EA