How long can IRS Collections aggressively enforce against you and pursue you for a tax liability?
How Long Does IRS Collections Have to Collect a Balance Due
A Statute of Limitations [ as it pertains to an IRS tax liability] is the duration of time that the IRS can legally attempt to collect on a tax liability that you owe.
Generally, the IRS will have 10 years to collect a liability from the date that the tax liability has been assessed under IRC Section 6502.
The IRS cannot collect on you forever but 10 years from the date of assessment is a long time given the resources of the Internal Revenue Service.
Once the Statute of Limitations has expired, the IRS can no longer collect on the balance due.
The key term is from the date that the “tax has been assessed.”
A tax is typically assessed when a taxpayer files a tax return.
Of course, there are exceptions and events that extend or toll the Statute of Limitations.
For example, one of the exceptions is if you have failed to file your income tax return. Another exception is if you amended your income tax return.
There are several exceptions and tolls to the Statute of Limitations. Below is a non-exhaustive list:
Non-Filer Exception to IRS Statute of Limitations
Failing to file a federal income tax return for a particular tax year does not relieve you from the tax liability for that tax year.
Therefore, if you have unfiled income tax returns, the IRS can collect from you forever on that tax year.
Further, if you have tried to hide income or have filed a fraudulent income tax return, the statute of limitations does not apply on IRS collections and enforcement.
Five (5) Common Tolls that will extend the 10 Year Time Limit
Appeal
A Collection Due Process (CDP) Hearing extends the Statute of Limitations from the date that service is filed until such time that there is a determination of the Appeal Hearing or the request for a CDP is withdrawn.
Bankruptcy
The IRS Collection Statute is generally suspended during a pending bankruptcy as the IRS is not allowed to collect during a bankruptcy proceeding.
However, once the bankruptcy stay is lifted, the IRS can pursue aggressive collection and enforcement action against you [ see below ].
Suit to Reduce Assessments to Judgment
As the date for the expiration of the Collection Statute approaches, the IRS can start a lawsuit against you to turn your tax liability into a judgment against you.
If the IRS does so, the filing of the lawsuit suspends the Collection Statute Expiration date.
Further, if the IRS is successful in the litigation, 20 years from the date of the judgment is the amount of time that the IRS will have to collect on the tax liability.
Essentially, that gives the IRS 30 years to collect!
Offer In Compromise
The Statute of Limitations will be suspended during the pendency of an offer in compromise.
Installment Agreement
Generally, the Statute of Limitations on IRS Collections is suspended while an installment agreement is established.
IRS Tax Notices ? What’s Next from the IRS
Federal Tax Lien
A federal tax lien is a lien against all of your property [ bank accounts, investments, retirement accounts, real estate, etc. ]
It gives the IRS the legal authority to seize your property [ see above ] and garnish your wages if you are employed.
If you own real estate, you will be unable to sell the property without first paying the IRS the underlying tax as well as the penalties and interest, that both accrue on a daily basis.
Bank Account Levies
The IRS can levy your bank account up to 100% of the tax liability.
The IRS will continue to levy your bank account until such time that the tax, including penalties and interest are paid in full.
Seizures
IRS Collections can seize against all of your personal and business property [ bank accounts, investments, retirement accounts, real estate, business assets etc. ]
Income Execution
NYS will contact your employer.
Your employer will be legally required to send up to 80% of your wages, until such time that the entire balance of your tax liability is paid.
US Passport Suspension
If you owe more than $50,000 to the IRS, your passport will be suspended at some point and you may be unable to reenter the United States if you leave the country.
Assignment of a Revenue Officer
If IRS Collections deems that your matter is a serious tax matter, an IRS Revenue Officer will be assigned to your tax liability.
A Revenue Officer will come to your home and/or place of business and will aggressively enforce against you, your assets, and your income.
Tax Refund Offset
If you owe IRS back taxes, the IRS will keep the refunds that you are entitled to and apply the refunds to the tax liabilities.
Get IRS Tax Help
To properly determine the collection statute expiration date, a knowledgeable tax attorney must be consulted as the proper remedy to solving a tax problem often revolves around the Collection Statute Expiration Date [ CSED ].
Every tax matter is different.
Ten (10) or more years is too long to try to hide from the aggressive enforcement of the federal government.
If you have an unfiled income tax return or owe a tax liability, our experienced IRS tax attorneys can be of help.
