How long does the IRS have to collect taxes?

| Jan 22, 2021 | Tax Collection

The Internal Revenue Service (IRS) must follow guidelines when it comes to the collection of taxes. What does this mean? A general rule of thumb: the IRS 10 years to collect taxes. Of course, this general rule does not always apply. There are exceptions and other factors that can result in an extension on this time period. For example:

  • Fraud. The feds can extend the end date to collect taxes indefinitely if they can establish that the taxpayer fraudulently completed their returns.
  • Bankruptcy. If a taxpayer enters into bankruptcy, the end date is essentially suspended. The clock essentially restarts after the taxpayers’ discharge date with the addition of 6 months.
  • Hearing.  A taxpayer’s deadline is also extended when they request a hearing to dispute a tax.

These are just a few instances that can result in a change to the statute of limitations and allow the IRS with additional time to go after a tax bill. Other examples can include military involvement as well as living abroad.

Why is this important?

It is not uncommon for taxpayers to wait to deal with their tax obligations. This could mean a taxpayer may put off their tax bill for years. The taxpayer likely has good intentions, perhaps hoping that finances will become more stable and they will be able to make the tax payment at a later date. Whatever the reason for the delay, this can lead to serious questions about the statute of limitations. As a result, it is wise for taxpayers who find themselves in this situation to seek legal counsel from those experienced in this niche area of tax law. The attorneys at Goldburd McCone are experienced in these matters and can guide you through the process while advocating for your interests.