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.
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. 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. If you're struggling financially and paying your tax debt is simply not feasible due to considerable difficulties, the first option you should explore is the current non-collectible condition.
Trying to find the best approach to dealing with tax debt can be stressful and confusing, but a TaxAudit tax professional can help you determine the best strategy to resolve it. It's important to consult your state's tax professionals and find out what your options are for debt relief as soon as possible. As with most things tax-related, it can be a bit difficult to determine when the ten-year collection period of your tax debt ends. 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.
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. Once you can authenticate that the tax liability has been eliminated, the IRS must issue an official certificate of exemption from federal tax liability or tax withdrawal. In addition, state tax agencies don't necessarily have their own Taxpayer Bill of Rights and can pursue state tax debt more aggressively than the IRS. In short, when the IRS can't sue you for payments, it stops counting the time limit for paying your debt.
An OIC is an agreement between a taxpayer and the IRS that resolves a taxpayer's tax liability by paying an agreed reduced amount. 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. 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. Acting quickly to pay your tax debt will give you the clean slate you need to achieve your long-term financial goals.
You can call the IRS at 800-829-1040 (see telephone support for hours of operation) to discuss any IRS bill. . .