The IRS Statute of Limitations is a Solution

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In our many dealings with the IRS in Colorado, the Statute of Limitations is often a key element to consider in regard to tax relief help.  This affects the amount of time the IRS has to set up a payment plan, whether you would qualify for an Offer In Compromise, and even whether you owe the debt any longer.  By analyzing this important event for many clients, we have seen $100s of thousands of dollars eliminated from struggling taxpayer’s debts!  Many tax resolution companies have one or two pet solutions that a sales person will try to sell you.  While we offer those same types of solutions, we also have a whole arsenal of tools to employ that often a salesperson at a national chain may not even understand. Knowing Colorado’s Statute of Limitations is one more tool in our box of solutions.  We are Advanced Tax Solutions, CPA, PC, and we take fixing tax problems very seriously.  

One of the reasons we have such a strong reputation is that your initial consultation is with a licensed professional, who is also a Certified Tax Resolution Specialist and who understands these complex rules.  We have a great reputation in an industry that doesn’t.  Many of our competitors use unlicensed and unqualified salespeople to sell you a solution.  Here, you will only meet with professionals to determine what course of action is best.  The meeting is provided at no charge.

How long does the IRS have to collect a tax?

The IRS Statute of Limitations is well worth understanding whether you live in Colorado or anywhere in the country. This statute only applies to taxes that have been assessed, so the first thing that must happen is that a tax return needs to be filed to start that 10-year clock ticking. If you don’t file, the IRS has no limit on how long they can go after that year.

On the flip side if you don’t need tax relief help to owe money to the IRS but have a refund owed to YOU for an old tax year, you only have three years to file a claim for that refund. If you don’t file for the refund within the three year period, by law you lose it. The IRS gets 10 years, and you get three. You can tell who writes the laws. But I digress.

Generally, the IRS has 10 years to collect the balance due (IRC Sec 6502).  The 10 year time period doesn’t start until the IRS assesses the tax and sends a bill.  Because of that, most Statutes for tax returns start on April 15th. If the return is filed after that date, the 10 year period does not start until after the tax is actually assessed by the IRS.  Because some events can trigger an extension of the Colorado statute of limitations (IRS calls them tolling events), it’s really important to review the information the IRS has on file to determine the actual day that the statute of limitations runs out.  After that date, and as a fact of law (NOT IRS discretion), the balance simply goes away, and you do not owe the tax any longer. However, because of various legalities people can easily misunderstand exactly when their statute of limitations runs out.

How do you determine when the Statute of Limitations expires?

You CAN call the IRS and ask them when the Statute Expiration date for collections will expire for each year that a balance is due. The two flaws with making that call is that you will be pointing out to the very same people that are trying to collect from you that time is running short.  You very well may be kicking a sleeping dog.  The second problem is that the collection person may not understand it and give you the wrong information!  The information could even be wrong in the IRS’s computer system.  Through our expert tax relief help specialists in Denver Colorado, we can access your information directly from the IRS’s website and calculate the filing date, the tolling events and anything that affects the statute.  The IRS collections division will not be notified that the information was requested.  From this, we can accurately determine that magical date!

What kind of events will increase the Statute of Limitations?

The more common events that cause the 10 year statute to be extended are as follows:

1)  Filing for bankruptcy extends the Statute for Collections for the entire time you are in bankruptcy.  While you are in bankruptcy, the IRS cannot collect from you, so they add that time PLUS 6 months to the time they have remaining for collecting the tax.

2)  Filing certain types of appeals (such as a collection due process appeal or an appeal with the Taxpayer’s Advocates Office) will extend the statute.  During the pendency of the Appeal, the IRS stops collections.  The amount of time the collections have been stopped plus 30 days get added to the Statute of Limitations for collection of the tax.

3)  Leaving the country for more than 6 months can cause time to be added to the statute of limitations.

4)  You can sign a waiver to give them more time to collect.  While this is generally not a good idea, sometimes it’s in your best interest to do so.  The IRS may use the hammer of levying your wages to get you to sign the waiver.  It’s almost like blackmail, they sometimes won’t release a levy until you sign a document giving them more time to collect.

5) Filing an Offer In Compromise with our tax relief help will extend the Statute of Limitations and give the IRS more time to collect.  As mentioned in the Offer section of this website, it’s a dangerous thing to give the IRS a perfect path to all your assets and income streams unless you have a chance of winning!  If an Offer In Compromise fails, the time the Offer was in the system, plus 30 days, is added to the time the IRS has left to collect the tax.

6) The amount of time the IRS was considering the acceptance or denial of an installment agreement is added to the Statute Of Limitations for collections, plus 30 days.

7) The IRS can file suit and get a judgement from the court that gives the IRS more time.  This is rare, and it’s generally only employed for very large debts.  But the IRS CAN sue for more time.

This is not an exhaustive list, but it is a good starting point for the more common ways the statute can be extended.

If you have an old tax liability,  you may want to find out the actual date it expires before trying to get any type of solution with the IRS.  However, calling to ask them for the information may spark up aggressive collections.  They will almost always ask where you work and where you bank.

We research Statute of Limitation dates all the time, so let us know if we can support you with that. A little professional advice could make you feel a whole lot better about your tax problem with the IRS!  Whether you live in Colorado or elsewhere, having the taxes expire due to the IRS Statute of Limitations is a great solution if the circumstances are right.

If the tax will simply go away due to the amount of time that has passed, why kick the sleeping dog?  With a Power of Attorney and our expert tax relief help, we can calculate that magical date and the IRS collections will be none the wiser!


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