EXPIRE IT: IRS STATUTE OF LIMITATIONS

The IRS has 10 years after the tax has been assessed to collect the debt owed, NOT 10 years for the date the return should have been filed. Often the best settlement option is to let the collection period expire. If your IRS tax debt has been around for a long time, we will determine during the power of attorney work phase the exact date the IRS tax liability will run out. IRS form 2848 allows us to secure this type of information before we review the pros and cons of each option available to settle your tax debt.

It is not uncommon for clients to ask us to help them with an IRS problem that has expired. There can still be information on their credit report that appears that the IRS tax debt is still valid. However, even if it has been 10 years since the assessment the tax liability can still be valid if you have taken certain actions that can EXTEND the statute of limitations period such as an Offer in Compromise or filed a bankruptcy that was not completed. If you go into either of these settlement options and don’t complete them, you have extended the time the IRS can collect your tax debt.

The statute of limitations for auditing a return is three years from April 15 if you filed the return on time unless you are guilty of tax fraud. If you filed the return after April 15 deadline the IRS has three years from the date of assessment to audit your return.