" " IRS Statute of Limitation on Debt Collection | IRS Solver " " " "

One thing you can stop worrying about is whether the IRS will chase you forever like Tom Hanks did Leo DiCaprio in “Catch me if you can”. Fortunately, there is such a thing as IRS statute of Limitation.

How Long Can the IRS Haunt Me down to Pay?

Lucky for many, Uncle Sam can only attempt to collect your unpaid taxes for ten years from the moment your tax declaration was assessed. An assessment basically puts your debt in the IRS’ books. Assessments take place in three situations: 1, after you file your tax returns but don’t submit a payment if there’s an amount owed; 2, if you didn’t file a tax return and the IRS makes an estimated filing of your returns with an estimated debt and 3, if you’re audited, once this audit is completed.

Let’s say you filed your taxes and you owe but you didn’t pay. You’ll receive a letter from the IRS. The date of that letter is the first day of the ten years they have to request you to pay your debt. The way they “request” or attempt to collect is putting a levy in your wages or bank accounts, or take your property. This last step is very unlikely but possible nonetheless, depending on your debt and situation and left to the IRS’ discretion. If they suspect tax evasion, the story might unfold a bit differently.

Is There a Way to Make those Ten years Shorter?

Unfortunately, no. There’s only a way to extend the statute of limitation on tax collection and that is if you file for bankruptcy and the IRS can’t collect because the bankruptcy court issued a stay on your debt, meaning they can’t attempt to collect because you filed for bankruptcy, most likely chapter 7 or 13, provided you meet all requirements.

However, the ten year limitation period is not the end of the ball. It can be extended if you choose to do so, by agreeing to pay your debt in installments. Given that circumstance you’ll have to sign a form in which you waive the ten year limitation period, meaning that if you stop paying the installments altogether, you risk the IRS having the right to attempt to collect without a statute of limitations. Before signing such document, we recommend that you seek help from a tax professional who specializes in tax debt.

What Happens after 10 Years?

The IRS won’t throw you in the debtor’s jail anymore if you don’t pay, luckily that’s something from the past and you have many chances and years to pay your tax debt and start fresh.
After 10 years the IRS has no grounds by law to keep trying to collect, and as those ten years get close to an end, they might get more aggressive in their approach.
Once those 10 years meet their last day your debt is erased and the IRS can no longer get ahold of your wages and/or bank account.

One should not, however, count on letting 10 years pass hoping the IRS will forget about it. As soon as you realize you are in a pickle and owe the IRS taxes, take action. In these situations, ignorance is never bliss.

Do you owe more than $10,000 in back taxes? Protect yourself. Protect your business. Contact IRS Solver for a consultation.


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