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  • Brian Barto, EA

How Long Can the IRS Collect on a Back Tax Debt?: The Statute of Limitations



We deal with clients in Winchester, VA, and Martinsburg, WV that owe back taxes. Sometimes, the back tax debt has been owed for a LONG time. The IRS has 10 years from the date of assessment to collect a tax debt. That is all, 10 years. In most cases, after 10 years the debt becomes unenforceable. For example, if the 2014 tax return was filed on Apr 1, 2015, and the tax was assessed on Apr 5, 2015, the IRS would have until Apr 4, 2025, to collect that tax. If you owe back tax debts, ask your tax professional to pull your “account transcripts.” The Account Transcript will list everything that has occurred with that particular tax year for the taxpayer, including when the return was received, when the tax was assessed, the penalty and interest charged, and payments received. From the account transcripts, you can then calculate the “Collection Statute Expiration Date” (CSED) for each tax assessment or each tax year.

It is important to note certain actions on a client’s part will toll, or freeze, the statute, preventing it from running. Such actions include the filing of an Offer-in-Compromise, filing a Collection Due Process (an appeal) request, requesting an installment agreement, and filing for bankruptcy. These actions prevent the IRS from taking collection action, and therefore stop the 10-year collection statute from running. Therefore, these actions EXTEND the 10 year collection period. If your situation is complicated this CSED might be difficult to calculate. For example, If you filed taxes and owed a certain amount, but later the IRS found an error and assessed an additional tax. Now the additional tax assessment has a separate 10-year expiration date. After that, you applied for an installment agreement that caused the CSED to toll or freeze. Now it makes your situation even more complicated. Believe it or not, the IRS system does not always have the accurate Collection Statute Expiration Date on your records. You might be still getting tax bills for taxes that you no longer owe because the CSED has expired. At Tax Debt Resolution Services of Winchester, VA, our tax professionals use a 3rd party software that easily calculates this CSED for each tax assessment. At times, our calculation is more accurate than what the IRS has on file and we have to fight to get the CSED date fixed.

The tolling of the collection statute is why filing Offers-in-Compromise that have no chance of success accomplishes nothing but wasting the tax practitioner’s valuable time and the client’s limited resources. An Offer-in-Compromise is when you make an offer to settle your tax debt for less than what you owe. These often take a year or more for the IRS to process thus extending your CSED for more than a year IF the offer is unsuccessful. Now, I am not suggesting you not file if you are, in fact, a good candidate for an offer-in-compromise. I simply suggest you consult a good tax debt resolution specialist to determine whether your offer is likely to be accepted. Our team is trained using the same system/formula that the IRS uses; thus, maximizing the chances your Offer-in-Compromise will be accepted.

At Tax Debt Resolution Services of Winchester VA, our mission is to help you eliminate your IRS issues and the stress the IRS has created in your life and help you get back to doing what you do best! We help our clients in Winchester VA, Strasburg VA, Martinsburg WV and Charles Town WV to resolve their tax debts! If you need assistance please feel free to contact me at 540-662-4432 or brianbarto@libertytax.com.

Brian Barto

24 Weems Lane

Winchester, VA 22601

540-662-4432

helpwithtaxissues.com

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