What is a “statute of limitations” and how does it apply to debts you to the IRS?  If you are a target of IRS collections, how long does the IRS have to collect a valid tax debt?  Is it possible for the IRS statute of limitations on collections to be longer than the 10 year statute of limitations established by law?

A “statute of limitations” establishes a time limit for legal action.  In this case, the IRS typically has 10 years from the assessment of a tax debt to collect it.  If they fail to do so within the statutory period, the taxpayer would not have to pay the tax due.  The primary reason for US taxpayers to exceed the 10 year statute of limitations is simply the inability to pay the debt and the lack of assets or income for the IRS to attach or garnish.  Usually when you owe a debt to the IRS the agency aggressively files liens against your real estate, business or other assets.  They may choose to levy your bank account and seize all of the funds therein.  Another option for the collection of unpaid taxes is wage or income garnishment.

The challenge for Californians is in the calculation of the funds available to repay taxes based upon IRS Form 433-A.  The cost of living is obviously not based upon the realities of living on the west coast.  Most of the cost of living allowances (rent/mortgage, food, gas, utilities) are based upon figures that are simply too low for most Californians to be able to afford to live upon.  Make sure you fill this form out completely and accurately.  Misstating income or available assets on this form can lead to genuine trouble with the IRS.

The statute of limitations does not apply until an assessment has been made by the IRS.  For those who fail to file the IRS cannot make an assessment on what has yet to be filed, and in these cases the statute of limitations clock doesn’t even start.  Taxpayer behavior or actions that is considered to be fraudulent can also extend the statute of limitations.

The IRS statute of limitations on collections exists to provide relief for those who simply cannot afford to pay the IRS the tax debt that is due.  IRS collections can be quite harsh, and the attorneys at Allen Barron help US taxpayers to stand up to the IRS while protecting them from initial attempts at a levy or garnishment.  If you owe the IRS more than $20,000 we invite you to call us at 866-631-3470 for a free consultation. 

Contact an Estate Planning, Business Law Or Tax Attorney Today

To set up a free, no-obligation consultation with one of our knowledgeable San Diego based estate planning, business and tax lawyers, or learn more about our tax preparation, accounting and business advisory services call us at 866-631-3470 or contact us.