The Statute of Limitations

As with anything in life, there are always limitations and when it comes to debt owed to the IRS it is said that they only have 10 years from the day of assessment to collect any monies that have become due. Due to many exceptions, waivers and extensions being part of the IRS rules and regulations no one can actually be sure of what is the true maximum date for collection.

With this point in mind the statute of limitations can often does vary in each case and other considerations are taken on board which could affect both you and the IRS in some way or another and that is a number of scenarios including filing an offer in compromise, requesting the need for installment based payments or even filing a petition for bankruptcy. The 1998 IRS Restructuring and Reform Act have seen many major changes to statute of limitations with one change being that most (if not all) “voluntary” extensions being terminated which were previously extracted from taxpayers.

Are there any exceptions?

Everything to do with the general stature of limitations is in IRC 6502(a) (1): “(w)here the assessment of any tax…has been made…such tax may be collected by levy or by a proceeding in a court, but only…within 10 years after the assessment…”.

Unfortunately, things are not that easy when it comes to tax related issues involving the IRS but overall, the last thing they want is a major court battle which is followed by endless appeals so this is where exceptions can be made:

· If there is a time in which the taxpayer’s assets are controlled or held in custody by a court of law – plus 6 months

· Any goods held by the IRS have been seized from a third party individual and not that of the taxpayer – plus 30 days

· Any time in which any collection action has become barred as a result of the taxpayer filing a bankruptcy petition – plus 6 months

There are other extensions available with the other main one being an extension being granted as a result of a voluntary agreement between both parties – ultimately, the tax payer and the IRS (a Tax Collection Waiver Form 900 would be required in such cases) or an extension may also be granted if the tax payer has requested a CDP hearing, arranging installment plans or filing an offer in compromise.

No matter what the circumstances are, we will be able to help with such a scenario so don’t hesitate to contact us; our dedicated team are waiting to take your call.