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How Long Can The IRS Collect Back Taxes | IRS Collections | Florida

Updated: Nov 11, 2020

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Statute of Limitations - Time Limits on IRS Collections

Usually the IRS has Ten Years to Collect Money You Owe. When a taxpayer owes a tax bill to the IRS, are you on the hook forever? Fortunately, the answer is usually "no."

The "rule of thumb," is that there is a ten year statute of limitations on IRS collections. This means that the IRS can enforce collection of your unpaid taxes for up to ten years from the date they were assessed. Subject to some important exceptions, once the ten years are up, the IRS has to stop its collection efforts. Every year, the statute of limitations expires for thousands of taxpayers who owe the IRS money.

If your Collection Statute Expiration Date (CSED) is near, the IRS may act very aggressively to get you to pay as much as possible before the deadline or agree to extend it. The IRS may order a levy on every asset you have. This would include a wage garnishment, IRS bank levy, and property seizures. The IRS, due to "the clock winding down" may "put on a full court press." At this juncture the IRS may try to collect as money as possible as quickly as they can.

When Does the Limitations Period Begin?

The ten-year limitations period begins to run on the date of the tax assessment. This is the date an IRS official signs the applicable form at an IRS Service Center. For example, if you do not pay in full when you file your tax return, you will receive written notice of the amount you owe, a bill. The date on this bill starts the ten year limitations period. If you did not file a tax return, the IRS can create a Substitute for Return (#SubstituteforReturn) for you and make a deficiency assessment, which starts the ten year period. Thus, not filing a return and hiding for ten years accomplishes nothing. Suspension of Limitations Period

The ten-year collection period can end up lasting more than ten years because it can be suspended for one or more time periods. The time during which the statute of limitations is suspended is not counted toward the ten-year deadline. For example, IRS collection periods will be suspended during time periods the IRS is legally barred from taking enforcement action against you. This means that the statute of limitations period is suspended if you file for bankruptcy and the bankruptcy court issues an automatic stay preventing the IRS from taking collection action against you. The suspension lasts for the period of the bankruptcy case plus six months. The period is also suspended while the IRS is considering your request for an Installment Agreement, Offer in Compromise, or request for Innocent Spouse relief, or while you live outside the U.S. continuously for at least six months. The IRS can also extend the ten-year period by suing you in federal court; however, it rarely does this. Voluntarily Extending the Limitations Period

The ten-year Statute of Limitations period is not absolute. The "debt clock" can be extended if you voluntarily agree to do so. Back in the bad old dates (before 1998), the IRS used to put enormous pressure on taxpayers to agree to extend the limitations period beyond ten years. These extensions often lasted for ten or even twenty years. If the taxpayer refused to "voluntarily" agree to the extension, the IRS would make threats. Fortunately, this is a "BIG NO NO" and o longer allowed.

However, if you enter into an installment agreement with the IRS allowing for partial payment of the amount due, you'll likely have to sign a form waiving the ten-year limitations period. This extension can be no more than six years. If your "tax debt clock" is nearing its end and you still owe the IRS substantial money, IRS personnel may offer you an installment agreement with attractive terms in order to entice you to agree to extend the collection deadline. Before agreeing to any such extension talk to an experienced tax professional. You may be better off refusing to extend the deadline and let the IRS collect whatever it can before it runs out. This article is brought to you by the tax professionals at Flat Fee Tax Relief. Our teams have been providing valuable IRS collection help at a very affordable fee for more than a decade. Our tax pros are strategically located in Clearwater, Florida, and San Diego, California. This allows our tax professionals to service our clients from 8 A.M. Eastern to 6 P.M. Pacific time. This is extremely valuable when an IRS levy must be stopped in one day.


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