IRS Law Blog

You may already have an idea that the IRS is far from perfect, and makes mistakes when collecting taxes.  

That’s scary, but it’s also true.

And because those mistakes are often the result of unintentional mishap, the IRS is frequently left unaware of many of their errors. 

That means they are in the dark, and so are you.

It doesn’t have to be that way – IRS mistakes can be dug-up, revealed, and fixed.

One costly mistake that the IRS makes is miscalculating collection end dates. This is important for us to catch because this mistake benefits the IRS, not you. IRS collection end date miscalculations usually gives them more time to collect than legally allowed.  

Left undiscovered, this means the IRS could come after you to collect unpaid taxes when they should not be. The end result is you paying the IRS money that you do not owe them.

The IRS has 10 years to collect taxes from you, starting when a tax return is filed.  After receiving your return, the IRS processes it and inputs your filing into their database, and marks that you owe them money.  The marking of your tax debt is called an “assessment.”  From the date of assessment, the IRS has 10 years to collect the taxes from you. 

In most cases, after the 10 years expires, the IRS is obligated to clear your balance to zero.  The expiration of the 10 years is known as  your “collection end date.”

However, your collection end date can be extended by the IRS not keeping a proper accounting of the 10 years.  This is all done inside the IRS, with a clock that you cannot see, and their fingers on it changing the time to their favor.

We have caught IRS collection end date miscalculations on more than one occasion. Most recently, we discovered an IRS miscalculation when analyzing a client’s account transcript. 

An IRS account transcript is a summary of all IRS collection actions on your account, containing information such as: the date the IRS processed your tax return to begin their 10 year collection period, if the IRS can take your wages and bank accounts, and if your passport has been flagged. We use the information on your account transcript to verify that the IRS has correctly calculated your collection end date. 

Every person has an IRS account transcript that can be used to fact-check the IRS. In our client’s case, we discovered from the account transcript that an IRS agent had marked him with an installment agreement as “pending” for over a year and a half. 

This was an automatic red-flag. 

The IRS marks an installment agreement as “pending” when installment negotiations begin between you and an IRS agent. While you are negotiating an installment agreement, tax laws make it so the IRS cannot “hurt you” or take your wages, accounts, and property. All collection action against you pauses while your installment agreement is considered “pending.” As a result, this “pending” period is added onto your collection end date. 

In most cases, the IRS Internal Revenue Manual limits the time an installment agreement can be pending to six months. Yet we calculated from the account transcript that our client’s installment agreement had been pending for 18 months. 

Unaware of Internal Revenue Manual guidelines, the IRS agent added 18 months to our client’s collection end date, when it should have been limited to 6 months. As a result, the IRS got 12 extra months to collect from our client – and he wasn’t even aware of it, and never would have been told except for our review of his account transcript. 

Fortunately, we are able to remedy the IRS’ mistake by filing an appeal to the IRS Taxpayer Advocate. The Taxpayer Advocate works to help in times where the IRS fails taxpayers, including circumstances where you would experience economic harm or are treated unfairly, with the IRS not properly following their rules.

The IRS deciding to give themselves an extra 12 months for a “pending” installment agreement and not following their own Internal Revenue Manual guidelines clearly met the criteria for utilizing the Taxpayer Advocate. The Advocate accepted our case and assigned it to a caseworker. 

Working with the Taxpayer Advocate, we corrected the IRS’ overextended collection end date. The IRS agreed that they were trying to collect past the allowed timeframe. They agreed to reverse the 12 months that were added from the installment agreement incorrectly being marked “pending.” 

The result of removing the 12 added months was the arrival of our client’s correct collection end date. The arrival of the collection end date led to the IRS forgiving over $100,000 in taxes. Our client’s tax troubles were behind him. 

You should not have to pay for the IRS’ mistakes. A too-frequent error by the IRS is the miscalculation of collection end dates. We can discover these miscalculations through IRS account transcripts, and work to get back costly months – or years – that have been wrongfully added onto your original collection end date. Through working with the Taxpayer Advocate, we can get our collection expiration date back on track, and get your tax debt forgiven.