How Long Does The IRS Have To Collect Back Taxes?

Taxes are an integral part of any functioning society. However, there are times when individuals or businesses are unable to pay their taxes in full, either due to financial hardship or other reasons. In such cases, the Internal Revenue Service (IRS) may take steps to collect back taxes owed. But how long does the IRS have to collect back taxes?

The statute of IRS currently not collectible is the legal timeframe within which the IRS can pursue back taxes. The IRS has a limited period to assess and collect taxes owed. Once this time period has passed, the IRS can no longer legally collect the debt. The length of the statute of limitations varies depending on the specific circumstances of the tax debt.

For most federal taxes, the statute of limitations for collection is 10 years from the date the tax was assessed. This means that if the IRS has not collected the full amount owed within 10 years of the assessment, the debt is considered “expired,” and the IRS can no longer legally collect it.

It is important to note that the statute of limitations clock starts ticking from the date the tax was assessed, not the date it was due. The assessment date is typically the date the taxpayer files their tax return or the date the IRS files a substitute return on behalf of the taxpayer.

There are some circumstances under which the statute of limitations may be extended or suspended. For example, if a taxpayer enters into an installment agreement with the IRS, the statute of limitations is suspended until the agreement is paid in full. Similarly, if a taxpayer files for bankruptcy, the statute of limitations is also suspended.

In cases where the IRS currently not collectible suspects fraud or intentional evasion, there is no statute of limitations for collection. In these cases, the IRS can pursue back taxes owed indefinitely.

It is also worth noting that state tax agencies may have their own statutes of limitations for collection. These can vary by state and type of tax owed.

If you owe back taxes, it is important to take action as soon as possible. The longer you wait, the more penalties and interest will accrue, and the harder it may be to negotiate with the IRS.

One option is to work with a tax professional, such as a certified public accountant (CPA) or tax attorney. These professionals can help you understand your options and negotiate with the IRS on your behalf.

You may also be able to request an Offer in Compromise (OIC) from the IRS. This is a settlement agreement in which the IRS agrees to accept less than the full amount owed in exchange for a lump sum payment or a payment plan. However, OICs are not guaranteed, and the IRS can be very selective in granting them.

In conclusion, the statute of limitations for collection of back taxes by the IRS is generally 10 years from the date of assessment. However, this period can be extended or suspended under certain circumstances. If you owe back taxes, it is important to take action as soon as possible to avoid further penalties and interest. Working with a tax professional and exploring options such as an OIC may help you resolve your tax debt.