Owe Back Taxes? Worry Not: Ten-Year Statue of Limitations Could Dissolve Your IRS Debt

If you owe the IRS back taxes, there is hope that you may not have to pay all of it back if you wait long enough.

Many taxpayers are unaware of the 10-Year Statue of Limitations the IRS must abide by. From the date of your assessment to the ten year mark is the only time the IRS can hold you accountable for payment of your back taxes or unpaid income taxes.

This means if it has been over ten years since the initial date of your assessment, the IRS can no longer collect the back taxes from you. This is why an expert attorney, tax CPA or Certified Tax Resolution Specialist can help resolve your back taxes and IRS problems by just advising and strategizing with you to wait out the 10 year expiration date.

Recently a couple who was unaware of when their Statue of Limitations expired and was thus tangled in more IRS problems regarding their back taxes debt.

CCH (http://intelliconnect.cch.com) reports:

Taxpayers’ Burden of Proving Invalid Waiver of 10-Year Limitations Period Not Met; Case Remanded to IRS Appeals Office for Record Clarification

Married taxpayers did not meet their burden of proving that a waiver of the 10-year period of limitations on collection for some of the tax years at issue was invalid and that such a limitations period had expired. Although the waiver was valid with respect to the wife, who admitted signing a Form 900, Tax Collection Waiver, that was executed in conjunction with an installment agreement entered into by the taxpayers with the IRS, the taxpayers contested the validity of the husband’s signature that also appeared on that form. Since the nonwaiving spouse is not bound by the waiver where the other spouse on a joint return has waived the 10-year period of limitations, the court had to decide whether the husband signed the waiver in a de novo review of the validity of the husband’s signature, as the taxpayers had no prior opportunity to raise the issue of the underlying liability on the basis of the expiration of the 10-year limitations period. However, the court was not persuaded that the signature on the Form 900 was not the husband’s signature; therefore, the taxpayers failed to meet their burden of proving that the husband did not sign the waiver.

Alternatively, regardless of the authenticity of the husband’s signature, the husband could not repudiate the waiver contained in the Form 900. The taxpayers entered into the installment agreement with the understanding that the 10-year period of limitations on collection would be extended, and that by signing the extension they received the benefit of having their liabilities collected through an installment agreement. The IRS had also relied on the waiver and should not be deprived of its bargain of a longer collection period when the taxpayers received the benefit of a longer time to pay.

However, even though the record indicated that the taxpayers’ tax liabilities for some of the years at issues were assessed on the basis of the filing of joint tax returns after the taxpayers failed to pay the taxes shown on the returns, the record was not clear whether a notice of deficiency was sent to the taxpayers for those tax years for which the taxes were assessed following audits. There was no mention of a Form 4340, Certificate of Assessments, Payments, and Other Specified Matters, in the record, and the transcript covered tax years other than the years at issue. Therefore, the court remanded the case to the IRS Appeals Office to clarify the record as to whether a notice of deficiency was sent to the taxpayers for each of the tax years at issue.

So if you’re stressed about your inability to pay off your IRS back taxes, take a second look at your initial assessment date. If you’re near the ten-year mark, you can wait until your Statue of Limitation expires to dissolve your IRS income tax debt or unpaid back taxes debt.

More Tax Help, IRS News and Tax Relief Tips:

  1. Tax Help: How to Resolve Your Back Taxes & Prevent Tax Problems If You’re Short on Cash This Season
  2. Last Minute IRS Tax Relief Tips for Filing 2009 Tax Returns and Resolving Back Taxes
  3. It’s Not Too Late for Taxpayers with Unfiled Tax Returns to Resolve IRS Problems
  4. IRS Help and Income Tax Relief for Individuals and Businesses Unable to Meet Tax Obligations
  5. IRS Relief News: How to Determine if Bankruptcy is a Viable Tax Relief Option for Resolving IRS Back Taxes

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2 Responses to “Owe Back Taxes? Worry Not: Ten-Year Statue of Limitations Could Dissolve Your IRS Debt”

  1. henry press Says:

    what is the statute of limitation after assessment of a 6672 TFP?

  2. TRS Says:

    I assume you are referring to the Trust Fund Penalty assessed to you for not paying employment taxes? If so, The Collection Statue Expiration Date is 10 years from the date of assessment.

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