What is the statute of limitations for collecting tax debts?

Did you realize that there is a time limit as to how long a creditor can collect a debt that you owe to them?  Whether you owe the debt based on an oral or written agreement, a promissory note, or related to credit card charges, each debt has defined timeframes ranging from as short as 2 years to as long as 15 years that the creditor can collect the debt from you.  This timeframe is known as the statute of limitations.  A statute of limitation also exists for collecting tax debts at the federal level.

In general, the statute of limitation for tax debt owed to the Internal Revenue Service (IRS) is 10 years from the date when they send a bill to collect the amount owed.  This limitation also applies to a levy placed on your personal property.  This means that when the statute of limitations on the tax debt expires, any levy placed on your property related to that debt likewise expires.

However, there are several events that can lengthen the 10-year statute of limitations for collecting federal taxes due.  These events include the following:

Filing an offer in compromise. An offer in compromise is a proposal by a taxpayer for the IRS to accept less than the full amount owed but still consider the tax liability paid in full.  While the IRS is considering an offer in compromise, the statute of limitations on collecting your tax debt is not running.  The IRS can take up to two years to consider your offer.

Filing bankruptcy. Whether it is a Chapter 7 liquidation or a Chapter 13 reorganization, filing bankruptcy stops the clock on the statute of limitations for tax debt.

Signing an extension waiver. If you have signed other documentation with the IRS agreeing to remain liable for the unpaid tax debt beyond the 10-year statute of limitations, then the timeframe for collecting the debt may be indefinite depending on the wording of the waiver.

If you have unpaid tax debt that is approaching the statute of limitations, keep in mind that they IRS is aware of this timeframe as well.  You should expect that the IRS will escalate their collection attempts as the statute of limitation timeframe approaches.

Also, remember that the 10-year statute of limitations on collecting tax debt applies and other details noted above apply specifically to taxes owed at the federal level to the IRS.  If you owe tax to a state, you need to speak with an attorney to understand the statute of limitations, if any, on your specific tax owed.

How can I get help from a tax attorney with my tax matter?

By completing the short form found below, your information will be provided to a tax attorney who can assist with your matter.  This review will be based on your specific situation.  The review is free of charge, 100% confidential, and does not obligate you to anything further.

Remember that tax laws and the process of working with the IRS on tax matters can be complicated issues.  It is generally a good idea to have a trained tax professional in your corner who understands the way the IRS operates and can give you specific guidance.  Therefore, please take this opportunity to get help with your tax matter today.

by Mark Johnston

Mark has been a contributor to legal web sites related to bankruptcy, tax, and criminal law since 2011. He has an Accounting degree from Texas A&M University.