IRS Statute of Limitations

IRS STATUTE OF LIMITATIONS—What it Is and How to Use It!!

YES! There is an IRS Statute of Limitations. There is a point beyond which the IRS can no longer collect on a prior tax debt.

I am Dave Horwedel, the founder and CEO of two sister tax firms—GuardDog Tax and Torchlight Tax. The IRS has ten years to collect on a tax debt once it has been assessed. This date is called the Collection Statute Expiration Date (CSED). When this date passes, the debt is removed by the IRS. This deadline can be extended for a few different reasons– the submission of an Offer In Compromise, a request for a Collection Due Process Hearing, or IRS Appeals action extends the Statute of Limitations. This is something that must be considered in dealing with a long-overdue tax debt. Thus, if you have a tax debt that was assessed 9 years six months ago, and the IRS has not been coming after you for it, you might want to just wait six months and let it fall off! This has happened with my clients many times. As one example, a taxpayer came in and met with me who had this huge tax debt from an earlier tax year. I got a Form 2848 IRS Power of Attorney filled out naming myself and one of the other EAs, CPAs, or Tax Attorneys who work with me to represent the client. (I always try to have a second name on the 2848 so if I am out and the IRS calls, someone else can take the call.) I pulled the IRS transcripts and discovered the CSED date was a few months away. We checked back a few months later and the debt was gone!!! IRS transcripts show they’re all depth. No debt showing!! So knowing when a debt is falling off is a good idea. But do not push it too far. One of my clients (who had a large tax debt before he came to me) waited for a large debt to fall off. He then tried to wait another year for the next debt to fall off. Then he got a garnishment order that threatened to wipe him out. We were able to stave off disaster, but there were certainly a few tense moments there. Also, as the Statute of Limitations expiration date approaches, the IRS can get very active. I had a former IRS Revenue Officer tell me that an IRS employee can be fired for letting the Statute of Limitations. It is a good idea to contact a CPA, EA, or Tax Attorney (like those at Torchlight Tax) experienced in IRS Representation to investigate this for you. We know what to do. If your debt is small or you study up on tax law, you can contact the IRS yourself. I generally do not recommend this. I have seen too many IRS debt settlements go astray when the taxpayer mishandled the IRS communication. You are welcome to call us for a free consultation. If serious funds are involved, having a professional contact them would be my recommendation.

You can contact Torchlight Tax at 877 758 7797 or email us at info@torchlighttax.com for a free consultation. Make sure to like, share, and subscribe to our YouTube channel.