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Taxes Information |
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IRS Statute of Limitations: Do Taxes Ever Expire?
Many Americans believe that an IRS debt is a debt for life and that the tax collector can hound them to the grave. Thankfully, that is not the case and there are statutory time limits on the ability of the IRS to examine and collect taxes. Taxes do expire at some point and in some cases IRS does not get the money they were legally entitled to collect. Basically, IRS has 10 years from the date they send out their first bill to collect the tax.The 10 year rule does not apply to the states. Some, like California have no statute of limitations and the state tax collector can indeed hound you forever. The federal tax collector must get the cash before the clock runs out. For tax assessments made after November 5, 1990, the IRS cannot collect the tax after 10 years from the date of the original assessment absent special circumstances. Special circumstances that may extend the statute are: a bankruptcy not completed or wherein the tax is not discharged; filing an Offer-in-Compromise; or signing a Form 900 Waiver allowing the United States additional time to collect the tax. Also, it is possible for the government to sue to reduce the tax claim to judgment before the 10 years expires. If you never file a tax return, there is no statute of limitations on IRS requiring you to file, but as a matter of policy, IRS generally only requires non-filers to file the last 6-7 years. If IRS files for you by doing a Substitute-for-Return (SFR), they have 10 years from the date they file the SFR to collect from you. If a Federal Tax Lien is on file against you, it expires and becomes void if the underlying statute expires. You can find out when the statute expires on your tax bill by requesting a Record of Accounts (ROA) from IRS for each tax year you owe. If you can't afford to pay the tax, your account might be eligible to be put in a "temporary hardship" status. It may be possible to "ride out" the statute in hardship if you qualify. An impending statute might also be a beneficial factor in an Offer-in-Compromise. If you have a refund coming to you, you only have 3 years from the due date to collect your refund. If you file 3 or more years after the due date, the refund is lost. In some cases you can peruse a refund beyond the three years. If you full pay the tax, you can file a claim for refund within 2 years of the payment. If your claim relates to a bad debt or worthless security, you have 7 years to make a claim. The flipside to the 3 year refund rule is that IRS only has 3 years to examine a filed return by audit in most cases. Now, the tax code is complicated and there are exceptions to these rules. If you have committed fraud or tax evasion, there is no statute for audit. There is also a 6 year rule for audit in cases of "substantial omission" of 25% or more in income. But for most folks, the three year statute will apply on audits. Websites that can help you research these issues are: www.irs.gov, www.naea.org, www.exirsman.com, www.taxattorney.com, and www.etaxes.com. I do not recommend dealing with IRS on your own. You should get help from a tax pro if you have a tax collection or audit issue. Don't hire some company you saw on a TV commercial, hire a flesh and blood person or reputable firm. A good CPA, Enrolled Agent (EA), Accredited Tax Advisor (ATA), or Tax Attorney can be invaluable. If you want to call IRS yourself, they can be reached at 1-800-829-1040. James Robert Coleman, E.A., A.T.A.
MORE RESOURCES: So what are these state taxes on which nearly $234 million are owed? The answer can be found at http://bit.ly/bN1p8g — the Pennsylvania Department of Revenue website. NEW YORK - The developers planning to build a $100 million Islamic center near the World Trade Center site still have financial hurdles to clear: They haven't finished buying all the property they want for the project and are nearly a quarter-million dollars behind on real estate taxes and late fees. TOWNSEND -- Taxes, the economy, illegal immigration and even school uniforms were covered during a two-hour candidates forum for Democrat and Republican candidates for the 1st Middlesex District at Memorial Hall Thursday. Campaign 2010 GOP businessman runs for governor Jack Kimball wants to slash state taxes that he says handcuff New Hampshire entrepreneurs. But if the Dover Republican's gubernatorial campaign is rooted in his decades as a businessman, it's also a product of the Tea Party movement that emerged as a conservative political force following President Obama's election two years ago. "I look at things ... Minnesota's candidates for governor engaged in a heated debate over taxes and the deficit-plagued state budget before a wind-chilled but rowdy crowd Friday at the Minnesota State Fair. TOWNSEND -- Taxes, the economy, illegal immigration and even school uniforms were covered during a two-hour forum for Democrat and Republican candidates for the 1st Middlesex District at Memorial Hall yesterday. West Virginia state government collected $31 million more in taxes last month than expected, suggesting signs of a rebounding economy. Massachusetts has collected $89 million more in taxes during August compared with the same month last year, but... Congress seems increasingly reluctant to let taxes go up, even on wealthier Americans.Worried about the fragile economy and their own upcoming elections, a growing number of Democrats are joining the rock-solid Republican opposition to President Obama's plans to let some of the Bush administration's tax cuts expire.Democratic leaders in Congress still back Obama, but the willingness to raise ... My long-standing complaint against a certain form of conservative economic thinking, that usually promoted by Wall Street Journal editorial page, is that it considers just about every economic decision people make is a reaction to tax law . I still think that's bogus. |
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