Statute of Limitations on IRS Collections

At Wiggam Law, we specialize in helping Georgia clients navigate their way out of overwhelming tax debts and obtaining the best possible resolution when dealing with the IRS or state taxing authority. One of our tax resolution strategies involves the Statute of Limitations on IRS collections, which is a little-known statute that can lead to big results in your tax case.

Under the Statute of Limitations, the IRS has 10 years and 30 days from the date of assessment to collect on taxes due. This time frame is also referred to as the Collection Statute Expiration Date (CSED). Once the Statute of Limitations expires, the IRS has to stop its collection efforts. Typically, the IRS will write off this debt – unless the taxpayer is an otherwise prominent and/or public figure.

Every year, thousands of taxpayers have their tax debt eliminated as the statute of limitations expires. The strategy, therefore, is to wait out the statute of limitations while also avoiding tolling. Tolling is a legal term; it allows for the pausing or delaying of the time period set forth by the statute of limitations. With the IRS, if the tax collections time frame is suspended, then the statute of limitations can be extended past the 10 years. This can happen for several reasons. For example, if a taxpayer files for bankruptcy, the court will issue an automatic stay preventing the IRS from taking collection action. The statute of limitations may also be suspended while the IRS considers a request for an installment agreement, offer in compromise, or innocent spouse relief. Taxpayers who submit a proposal for an installment agreement; with the IRS (also known as an IRS payment plan) will have their 10-year statute of limitations period tolled while the IRS is considering their proposal. For taxpayers who submit an Offer in Compromise (allowing taxpayers to make an offer for less than the total taxes owed), the statute of limitations will toll from the time that you submit the OIC until the IRS makes its decision on the offer. For a taxpayer petitioning for Innocent Spouse Relief (relief from tax penalties for an item your spouse/ex-spouse improperly reported on your tax return), the statute of limitations will toll until the petition expires or the court issues its final decision. The Statute of Limitations on IRS Collections may also toll if: the taxpayer files a lawsuit or an appeal against the IRS, the taxpayer is out of the country for six months or longer, and for military deferments.

It is the taxpayer’s best interest to track the statute of limitations themselves, as the IRS frequently will miscalculate the statute of limitation or will not let the taxpayer know if/when the statute has expired. Once the statute of limitations is up, the next step is to obtain documentation that the IRS debt no longer exists and request that the IRS release any outstanding tax liens.

Recently, Wiggam Law worked with two separate clients on successfully resolving their tax debts following the IRS Collections Statute of Limitations. Our experienced tax attorneys saved these clients more than $1.1M. (See the redacted IRS account summaries, below).

If you are facing tax, personal, or business debts and need help with your case, please contact Wiggam Law by calling 404-537-5030 or by messaging us through our website. Our experienced tax attorneys can help develop a solution that works for you.

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