Yes, in fact, the period of time that the IRS can collect a tax debt is generally limited to ten years, according to the IRS statute of limitations on collections. When the ten years have passed, the IRS is required to cancel the debt as a bad debt, essentially forgiving it. Under certain circumstances, the IRS will forgive the tax debt after 10 years. However, that 10-year period may be longer than expected, given the lengthy suspensions, the IRS tax assessment date compared to your last return, and whether or not you have kept up with your tax returns since the debt period began.
Once your account is labeled CNC, the IRS will review your finances annually. If your financial situation improves, the IRS may try to collect the balance due. In general, the tax agency has up to 10 years to collect the taxes due. 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. Yes, on rare occasions, the IRS will erase the tax debt after ten years. However, due to lengthy suspensions, inconsistencies between the IRS tax settlement date and the date of your last return, and if you've been paying your tax returns on time since the debt period began, that 10-year term may be longer than you think. 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. After all, there's nothing wrong with finding a legal solution to your tax problem, as long as it's firmly rooted in reality. 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.
While companies advertise that they can help taxpayers struggling with their tax debts, they often don't keep their promises, says the Federal Trade Commission. 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. While the IRS offers several options for relief, here are three to consider if you owe back taxes. If you've had a tax debt with the IRS for many years due to unfortunate circumstances, a costly accident, or financial problems during the first few years of the recession, you may be considering a possible due date on your debt, provided that you've kept (and continue to keep) a thorough record of your communications with the IRS and I don't have the means to return them at this time.
It can be a legitimate option if you can't pay your full tax liability or if doing so creates financial difficulties. Documentation proving the tax debtor is needed in cases where a federal tax lien is withdrawn or released, which is a necessary step to begin repairing financial and credit profiles. Simply put, if your partner was responsible for return errors that you weren't involved in and had no reason to know about, you can avoid sharing the tax bill. 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.
One option is to consult with a tax professional before going to the IRS and providing all necessary documentation. While full tax debt forgiveness is a bit of a myth, there are relief options you can use to reduce or eliminate your liability for unpaid tax debt. 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. In the case of a tax debt with the IRS, it's usually not reasonable to assume that you can simply let go of your CSED.
Suppose you've been suffering from a tax debt for a long time and you think your collection period is coming to an end. However, in theory, if your situation remains unchanged long enough, it's possible to survive your tax debt without paying a single penny. . .