Statute of Limitations Defense

    Using Statute of Limitations To Your Advantage

     

    The U.S. Congress has imposed a number of dates that act as barriers for the IRS, which can benefit the taxpayer. One of the most important barriers is the 10 year statute period on collection of tax.

    The IRS has 10 years from the time of a tax assessment (assessment occurs about the same date as the filing of the return) in which to collect the assessed taxes. When the 10 years has elapsed, the debt is no longer owed. The 10 year statute of limitations on collection rule is a popular subject in our office as many taxpayers do not fully understand the positive effect it may have on their situation and on their decision as to which legal option to use in dealing with tax debt.

    There are of course, certain circumstances that can affect the 10 year statute regarding collection of taxes, which includes the following:

    • If the taxpayer filed for bankruptcy during the 10 year period;
    • If the taxpayer files an offer in compromise during the 10 year period;
    • If the taxpayer filed an application for taxpayer assistance ruing the 10 year period;
    • If the tax payer files a collection due process hearing request during the 10 year period;
    • If the taxpayer agrees in writing to allow the IRS more time to collect the tax.

    A common problem taxpayers face and that we see in our office is the taxpayer who is relatively close to the running of the 10 year period who files an Offer in Compromise or bankruptcy to deal with the tax debt.

    If the taxpayer is relatively close to the 10 year date, they should tread very carefully before doing something that would stop the clock from running.

    Our clients have saved literally millions of dollars via the wise use of the statute of limitations period in combination with a partial pay installment agreement or non collectible status agreement. If you have a serious tax debt, or have received an audit notice that you think may be beyond the statute period, you can call us for free to discuss the statute of limitations on collection.