Statutes of Limitation on IRS Collection

Laws are set forth on the amount of time the IRS has to assess and collect taxes. In fact, the IRS has ten years from the date of the assessment to collect all taxes, penalties and interest. But once the ten-year period has passed, the taxpayer no longer owes the IRS any money. These time limits are subject to change by defined circumstances.

What are these Defined Circumstances?

These defined circumstances can include such things as the taxpayer agreeing in writing to allow the IRS more time to collect on the tax by signing a waiver. Another circumstance might be that the taxpayer has filed bankruptcy during the ten-year period. In either of these circumstances, the period for the IRS to collect is extended.

Approaching the 10-Year Date!

If a taxpayer is approaching the 10- year date, he or she should request copies of their IRS transcripts, making sure the assessment date is confirmed. In that way the taxpayer can accurately compute when the 10- year statute to collect will expire. Should the IRS attempt to collect a tax liability that has expired under the 10- year statute, the taxpayer must alert the IRS in writing that the IRS no longer has the right to collect the tax liability. If the taxpayer is correct, the IRS will write off the tax liability.