Regarding the Statute of Limitations on a Tax Debt
People often wonder if there will come a time when after a period of collecting tax debts, the IRS can no longer claim the amount you owe them. Is there such a thing as statute of limitations n IRS tax debts? The simple response is YES. The law states that the IRS can only go after you in a period of 10 years. After that time, your debts are considered non-existent, and your IRS problems, solved.
Although it seems like a simple story – outwitting the IRS for 10 years and then choosing not to pay them – this is not the case. Ask anyone who has tried not to pay the IRS for any amount of time. They will comment that the government is rather excellent at using any means necessary to collect on a debt. Ten years is quite a considerable amount of time for the IRS to use every tactic and strategy available. The IRS can also place a tax lien on your credit record that will remain there until the 10-year period has elapsed. This tax lien on your credit score will effectively reduce the latter to a point that you will be disqualified from any sort of loan no matter what you are trying to purchase. With this, you should try your best to refrain from getting a lien as it poses a grave IRS problem.
So the best solution is to actually work with the IRS so that they do not go to such extreme and damaging measures. Not only is 10 years a very long time to battle the IRS, but certain actions will also extend the statute of limitations period and make it last longer than the specified period. For instance, coming up with the resolution for a request of an Offer in Compromise (OIC) may take up to a year. The statute of limitations on your tax debt is essentially frozen during that period and in the event that your submitted OIC is not approved, it will continue from the point when the decision was made, which will effectively add another year to that 10 year period.
Filing for bankruptcy also lengthens your statute of limitations period. This occurs because until a decision on your bankruptcy claim is reached, the IRS cannot collect money from you and your 10-year period is frozen. As a result, your statute of limitation period is increased.
While many people may believe that the situation is bleak and none of this is good information, the fact is, this means that the IRS will not be able to chase you down forever. Ten years may be too long at time, and indeed it is, but the bright side is, it is not forever. Fortunately, there are a number of measures available to help those who are faced with an IRS problem lessen its impact. The first step is to consult a tax professional such as a tax lawyer or accountant. After all, handling the IRS is a task that should not be undertaken without the help from those who are more well-informed in the area.
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