Statutes of Limitation on IRS Collection
By legal definition, a Statute of Limitation means: The Time of Commencing Action. A Statute of Limitation is the prescribed time limit set forth by the law, for the IRS to assess and collect taxes.
Under the Internal Revenue Code, the IRS is required to:
- Assess taxes within 3 years from the date of filing, and
- Collect the taxes within 10 years from the date of assessment.
If the 3 years time limit expires, the IRS can’t begin proceeding in court without assessment for the collection of any tax. Similarly, if the IRS doesn’t collect the taxes within the ten-year period, the taxpayer no longer owes the IRS any money. But these time limits are subject to change under defined circumstances.
These defined circumstances could include such situations as being out of the country, filing bankruptcy, filing an offer in compromise, certain appeals and other actions. In either of these circumstances, the period for the IRS to collect taxes can be extended.
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