Five truths about how long the IRS has to collect taxes
Will my IRS debt ever just go away? Will there ever be a time that the IRS will just leave me alone?
Yes, and yes.
The collection of most every IRS debt eventually ends, and that would include yours. This is called the statute of limitations on IRS collections. The Internal Revenue Code gives the IRS a window of time to collect from you; after that window closes, you are free from your tax debt and the IRS.
Here are five truths about how many years the IRS to collect back taxes from you:
1. There is an IRS statute of limitations on collecting taxes. The IRS is limited to 10 years to collect back taxes, after that, they are barred by law from continuing collection activities against you.
2. The IRS 10 year window to collect starts when the IRS originally determines that you owe taxes – that is usually when you filed your tax return, or when the result of an IRS audit becomes final.
3. You can unknowingly give the IRS more time to collect. The filing of an offer in compromise, innocent spouse request, collection due process appeal or bankruptcy all gives the IRS more than 10 years to collect. Each of these acts extends the 10 years during the time they are pending. If you submit an offer in compromise, and it takes the IRS 9 months to investigate it, and the compromise is rejected, the IRS will tack 9 more months on to your collection time frame.
4. IRS tax liens become legally unenforceable when the collection window closes. After the collection statute of limitations expires, the IRS will no longer have an valid lien on your property, including your house.
5. After the IRS can no longer collect from you, they will make an internal adjustment to their books and credit your account for the amount of unpaid taxes, interest and penalties. IRS account transcripts can be obtained verifying that you no longer owe them – they will contain a line entry along the lines of “Time Frame To Collect Expired” and a resulting zero balance.
We can determine how much time the IRS has left to collect from you. First, the IRS has a date in their internal database – they will tell us what it is if we ask. Also, IRS account transcripts can be obtained and analyzed to determine and confirm your end date. If you are uncomfortable calling the IRS, a Federal tax lien will have information on it that can be used to calculate the statute of limitation on collection. It is important to know where you stand with the IRS, and to know whether you may soon be on ground that the IRS will be unable to reach.