Tag: IRS Statute of Limitations
In the context of an IRS problem case, an IRS Statute of Limitations, also known as the ‘Collections Statute of Limitations’. You’ll hear me sometimes call it the ‘CSED’, which is an acronym that stands for the ‘Collections Statute Expiration Date’, or sometimes you’ll hear the IRS talk about it as the ‘CoSED’, which is the ‘Collections Statute Expiration Date’ same thing.
The thing that’s interesting to know or that you need to know is that there is a 10-year IRS Statute of Limitations for the collection of income tax and payroll tax, as a matter of fact, and that begins to run 10 years from the date of the assessment of the tax.
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Now I could actually talk about this for an hour or two in a real technical setting, but I’m not going to do that. But what you need to think about is that the assessment date is when the tax became formally ‘due and owing’ to the IRS. That’s normally April 15th, which is the due date of the return for most people, but it’s not always.
If you file your return early, it becomes April 15th, the due date of the return, but if you file your return late, it becomes the later of those two dates. So if you file your return, you can get an October extension so you don’t have to file on April 15th. You go ahead and you file September 9th, then all things remaining constant let’s just assume they accept your return, and they assessed the tax on September 9th that will be the assessment date that the 10 years will start to run from.
Now there can be multiple assessment dates, and let me give you an example. You file a return, and it shows that you owe $100, then later on, the IRS finds a math error or they decide to audit you. If two years later, they decide to assess additional tax, then you would have a second assessment date, and the 10 year statute of limitation would run from that date for 10 years.
Now there are a number of things called ‘tolling factors’ that can apply, which will actually stop the collections IRS Statute of Limitations from running. I’m going to give you some examples, just off the top of my head this is by no means meant to be an exhaustive list. But an ‘Offer in Compromise’ is one thing that can hold your statute or extend it and a bankruptcy is another. There’s also the filing of an ‘Innocent Spouse’ application, or a ‘Collection Due Process Hearing’.
There’s a laundry list of different actions that could have been taken by you, typically, which could extend your IRS Statute of Limitations dates. I just wanted you to know that by no means is the 10 years an absolute end to your problems. I’ve seen statutes open for over 30 years, depending upon the various actions that taxpayers have taken on their own.
Now typically, what we will do as a representative in representing you and any taxpayer is go ahead and file a ‘Freedom of Information Act’ request and get your transcript information from the IRS, so that I can personally determine when your collections statutes expire and when your hell with the IRS will be over, once and for all.
This is by no means the only solution to an IRS problem, but it’s one of about five or six that can be a great solution to your IRS problems and sometimes we can actually ‘win’ just by letting time go by. That’s one of the many factors that we go ahead and analyze when we get your transcripts from the IRS after filing a ‘Freedom of Information Act’ request.
That’s pretty much all I wanted you to know about the IRS Statute of Limitations. Your tax problem is not a lifetime sentence. There is an end in sight. It might be a while. It might be very short. I’ve had cases where the statutes were already expired by the time they came to hire us, and I’ve had cases that were 10 years, of course. So I just wanted you to know that the ‘Collections Statute Expiration Date’ exists and that it might just be the solution to your problems.
If you need to reach us at the Law Offices of Darrin T. Mish, you can phone us at 888 GET MISH (888 438 6474).