Did you know that there is a time limit for the IRS to collect your tax debt? This is called the statute of limitation which at this point of time is 10 years. But this time can be extended by various factors. Also, the IRS knows exactly how much time they have to collect what is owed to them and their retrieval processes get significantly more aggressive as time goes by. If you intend to just ride out the storm, you may have another think coming. Here are the various factors that can extend the statute of limitation. Click here to read or watch more IRS Help resources.
If you apply for an Offer in Compromise or bankruptcy, the collection period stops at the moment you begin your application. Bear in mind that Offers in Compromise usually take more than a year to process and bankruptcies can last even longer so you might as well forget about waiting out the statute of limitations. Click here to watch or read more information on IRS Back Taxes.
When it comes to these things, it is important that you know your rights. For instance,the IRS will demand you file back taxes that go back more than 10 years, but you do not have to. The statute of limitations is clearly 10 years and no more, so you are responsible for maintaining your tax returns and paying your dues for that period of time and no more, no matter what the IRS tells you. If the IRS tries to get you to pay taxes for a time earlier than 10 years ago, you should contact a tax professional like a tax attorney or accountant.
It is almost impossible for the untrained layman to understand the complications of the tax code. Engaging the services of a tax attorney is extremely helpful. Even if they are not able to help decrease the total amount of tax you owe, they should be able to clearly explain your tax situation and most importantly how your total debt is derived.
When you understand how statute of limitations, debt and taxes all relate to one another, you may discover that you have a chance to outlast your time limit. If you do, congratulations but chances are you will need to be thoroughly familiar with the tax code and engage the services of a tax attorney to negotiate successfully with the IRS. Do not try to take on the IRS alone. Your chances of success are very slim.