Collection Statute Of Limitations For IRS Issues Finally Explained

There is a time within which the IRS has to collect the tax money that is due from taxpayers. This time period is referred to as the collection statute of limitations. Generally, the collection period is ten years from the assessment date. However, the time can be extended under special situations. The Internal Revenue Service has three years to audit the tax returns, three years to give a refund and ten years to collect the tax money that is due from taxpayers.

From the day the tax liability has actually been assessed, or charged to you, the Service will have 10 years to collect, or the balance will be removed. It is the same for payroll liabilities as it is for income taxes.

What happens when the collection statute of limitations expires?

When the collection statute of limitations expires and there is still some amount that is due, the taxpayer will not be liable to pay the amount. The taxpayer will have to continue making payments for any other years that have not expired under the statute. Sometimes the IRS doesn’t remove it and we need to call to get them to do it.

How can the collection statute of limitations be extended?

The collection statute of limitations can be extended when the taxpayer and the IRS comes to an agreement to extend the statute. This agreement will have to be reached before the expiration of the ten-year period. Filing an Offer in Compromise or filing for bankruptcy will extend the period of tax collection. For more information, please see my “free advice” tab on this site.

When we take on a case, we pull the IRS record of account for each outstanding year, as well as years paid off. We have found that sometimes the IRS collects money beyond the expiration of the statute. In those cases we have been able to get refunds for our clients. We have also helped several clients wait till the statute has expired, in cases where it was going to expire within months. I’ve saved a local attorney over $100,000 by helping him wait about 8 months till the statute expired.

If you think you have tax liabilities that may have expired or is close to expiration, then call us at 713-774-4467 so we can help you not overpay your taxes.

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