In general, the IRS has ten years to collect any unpaid tax, with the ten-year period commencing from the date that tax is assessed. For the purpose of determining the Collection Expiration Statute Date (CSED), it is necessary to determine the date on which the tax was assessed. Note that the statute does not begin to run until an assessment of tax is made, so it doesn’t do any good to miss a filing deadline in hopes of waiting it out for ten years. The IRS only becomes more aggressive towards the end of the ten-year collection period.
Questions about getting taxed by the IRS? Contact an experienced Roseville tax lawyer of NewPoint Law Group, LLP.
Suspension of the Statute of Limitations Period
There are several events that suspend the statute of limitations period. In effect, this extends the amount of time that the IRS has to collect any unpaid tax. Some examples include:
If a bankruptcy is filed, the IRS is prevented from collecting because of the automatic stay that is in effect by the bankruptcy court. The statute of limitations on collection is suspended during the time that the bankruptcy case is open, plus an additional six months.
Offer in Compromise
Filing an offer in compromise will extend the statute of limitations on collection during the time that the offer is pending, plus 30 days. An offer in compromise can easily take 6 months to a year to process, an important consideration when determining the best course of action for dealing with tax debt.
Collection Due Process Appeal
When the IRS issues a Final Notice of Intent to Levy, the taxpayer has 30 days in which to timely request a collection due process hearing, which will extend the collection statute while the hearing is pending. It may be beneficial to request an equivalent hearing after the 30-day period lapses, but within one year of the date of the Notice, as this does not extend the statute of limitations on collection.
Similar to an offer in compromise, an installment agreement suspends the statute of limitations on collection during the time that it is pending, plus 30 days.
Innocent Spouse Relief
The statute of limitations on collection is suspended from the time that a request for innocent spouse relief is filed until the expiration of the 90-day period for petitioning the Tax Court, or until a Tax Court decision becomes final, plus 60 days.
Voluntary Agreement to Extend the Statute of Limitations Period
If a taxpayer enters into an installment agreement that does not fully pay the tax due, the IRS may request an extension of the statute of limitations on collection. Although it may be advisable to agree to such an extension in certain circumstances, it is important to carefully consider whether an extension to the statute of limitations is the best strategy.
Rely on the Knowledge and Experience of Our Sacramento Tax Attorneys
If you owe taxes to the IRS, the course of action you choose should reflect careful consideration of several factors, including the likelihood of success, and how a particular course of action will affect the statute of limitations on collection. Contact one of a Sacramento tax attorney at 800-358-0305 or contact us online today.