About the Statute of Limitations on a Tax Debt

People often wonder if there will come a point when after a period of collecting tax debts, the IRS can no longer claim the money you owe them. Is there such a concept as statute of limitations n IRS tax debts? The answer is YES. The law allows the IRS to collect money from you for up to 10 years only. After that time, your debts are considered non-existent, and your IRS problems, solved.

In reality, the strategy of not paying your tax dues and outwitting the IRS is not that easy. If you ask anyone who has tried running away from their tax debts, all of them will say that the IRS will use all available means and techniques to collect their money. On top of this, a tax lien will also be placed on your credit record and remain there until after the statute of limitations has run its course. As a result, your credit record is lowered thus disqualifying your from any loans available to diligent tax payers. Because of these negative effects, it is necessary that you avoid a lien at all costs.

So the best recourse 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 example, 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.

Another situation that will affect the statute of limitations period is filing for bankruptcy. Since the IRS can't enforce any collection procedure against you while your bankruptcy is in process, again the statute of limitations is essentially frozen and resumes once your bankruptcy is denied. This again, will also affect the length of the statute of limitations on your tax debt.

Despite many people's belief that the news on statute of limitations only makes situations worse, a few are still grateful of the fact that the IRS can't chase them down forever. They may attempt to collect debts from you for a substantially long amount of time, but at least it is not forever. Fortunately, there are a number of options available to help those who are faced with an IRS problem lessen its severity. Seeking out assistance from tax attorneys and accountants is the first step in properly dealing with this kind of issue. After all, dealing with the IRS is too technical a task and you will only be able to properly do this if you utlilize the services of those who are conversant in this area.