STATUTE OF LIMITATIONS ON IRS COLLECTIONS

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Posted by: Gary Massey

Check out our new video about the 10-year Statute of Limitations on IRS Tax Collections!

The IRS has 10 years to collect a tax debt.  This is the Collection Statute of Limitations or CSED.  However, once the Statute expires, the tax is unenforceable.

In this video, we discuss the mechanics of the Statute of Limitations.  We also discuss the events that freeze or toll the statute.  Tolling of the statute means that the IRS has more time to collect on a tax.  Various events toll the statute.  These events include bankruptcy, filing an offer in compromise, and requesting an installment agreement.  For example, filing a bankruptcy claim freezes the statute for the period that the taxpayer is in bankruptcy, plus six additional months.

It is generally in the taxpayer’s best interest for the Statute to continue to run, hastening the date when the tax becomes unenforceable.

The IRS creates a tax return for an uncooperative taxpayer who does not submit their own return.  The return created by the IRS is called a Substitute for Return or SFR.  The SFR triggers a tax assessment.  In addition, it also causes the Statute of Limitations to begin to run.


Planning


We conclude our video with a discussion of the interplay between the Statute of Limitations and tax planning.  In particular, we discuss how the Statute of Limitations impacts the primary resolution options available to taxpayers who are faced with tax debt.  These options are the Offer in Compromise, Currently Not Collectible Status, and the Installment Agreement.

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Massey and Company is a boutique CPA firm is located in Atlanta, Georgia serving the needs of small businesses and their owners.

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