Statute of Limitations on Tax Debt Collections

If you have some tax debt and are concerned about rules and laws regulating its collection, then it may be in your best interest to learn as much as you can about these tax laws. One important rule that you need to consider is the statute of limitations on tax debt collections. For anyone who owes money to the IRS, currently not collectible status is important information to learn about. Once you know all about this statute, then you can assess whether or not what you owe falls into this category.

The statute of limitations on tax that you owe the IRS is 10 years. After this time has passed, then the debts that you owe the IRS will be discharged and you will no longer be responsible for them. It's important, though for you to understand when this period of time begins, so that you can know the true date of when your tax debt will be discharged. The 10 year period is going to begin when the IRS has assessed the debt that you owe. There are several ways to do this, including indicating the balance that was due when you filed a return or when you were assessed during an audit.

Getting the Full Details

While many people think that the statute of limitations is going to protect them from having to pay back any taxes after 10 years, this is not the case. There are actually a number of different things that could cause this limitation to be extended past 10 years. You should learn as much about these situations as you can, so as to avoid falsely thinking that your tax debts are going to be completely discharged after 10 years has passed.

One thing that can extend the number of years that the IRS has to collect on you is when you file for bankruptcy. Some of your tax debts may be relieved during this period, but it doesn't always cover everything. You may still owe some money on taxes that you have not filed yet. So when you enter into bankruptcy, this is effectively going to stop the countdown of the statute of limitations. Six months after you get out of bankruptcy, then the IRS will still have a lot of time to collect the taxes that you owe.

Another thing that can stop the countdown on your statute of limitations is if you leave the country. If you decide to go on an extended holiday for a year or even a few years, this is time is not going to count towards the limit the IRS has on collecting your taxes. If you have done this, then you're going to need to calculate this time and see how long that you were not in the United States. Once you come up with this number, then you can calculate how much longer you have to wait before the statute kicks into effect.

Near the End

Near the end of the statute of limitations on tax debt collections, the IRS is going to become more aggressive in its attempts to collect debts from you. As a result of your nonpayment, there may be a levy placed on your bank account, and this will effectively freeze all of your assets. Also, the IRS may begin to garnish your wages in order to make up for the debts that you owe. If you try to make a deal with them at this stage, just know that you won't have a lot of room to negotiate.