Updated: Sep 27
I've noticed on my social media timelines that people have been making statements such as "the IRS only has 10 years to collect taxes from you". Just like most things circulating on social media, this is only true to a certain extent but leaves out some very critical information. I want to share that information with you in this article.
The main thing that people leave out of the 10-Year Statute is when it actually begins. The clock does not start running when the taxes are due, it starts when your tax return is assessed. This is why it is important to get an IRS transcript of your account.
This can be either when the tax return is processed or if you haven't filed it begins when the IRS files an SFR (Substitute for Return) telling you what they think you owe. This is not the most ideal scenario! The IRS doesn't account for deductions you could have claimed to lower your tax liability so you will want to a consult a tax professional to see if filing to replace an SFR on your account will lower your liability.
So long story short, if you didn't file that return from 9 years ago don't get too happy. If the IRS hasn't reached out to let you know they did an SFR they still have 10 years to collect from you for that tax year. If you have back taxes that you need to file or an SFR on your account where you know the amount is too high reach out to me and my team at Bowens Tax & Bookkeeping Solutions. We'd love to see if we're a good fit to work together and get you in compliance with the IRS.
The IRS can't extend the 10 years just because they want more time to collect. However there are things that you as a taxpayer do that can trigger an extension to the 10 years they do have to collect. Here are 7 of them:
Issuance of a notice of deficiency - A notice of deficiency is a legal determination by the IRS of a taxpayer’s tax deficiency; the official name for the form is IRS Notice CP2319A: Notice of Deficiency and Increase in Tax.
Having your assets in custody of a court (usually involves a divorce)
If you leave the US for a continuous period of six months or more.
Wrongful seizure of property or wrongful lien on property
You file bankruptcy - the time added for a bankruptcy filing includes the time in bankruptcy plus six months. Note: For more information about how bankruptcy will affect your return check out this article - Bankruptcy and Taxes: What You Should Know
You file a collection due process hearing request
Filing an Offer in Compromise
Now don't get me wrong, the last 3 items can be game changer in resolving your debt but if the IRS doesn't accept your offer, denies your CDP request, or doesn't discharge your taxes in the bankruptcy then you're only giving them more time to collect. So you will want to weigh your options and make sure that the path you're taking will help you and not hurt you.
If you're ready to knock this debt out of the park with an offer or you need a tax lien or levy removed ASAP then you need to book a call with our team to see if we're a good fit to work together at https://bookingbowens.as.me/taxrelief.
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Timalyn S. Bowens EA is America's Favorite EA and Louisville's Tax Expert that will work hard to find a legal solution that is customized for you! As an Enrolled Agent licensed through the Internal Revenue Service Timalyn is able to fight the IRS for taxpayers in all 50 states.
When you are facing questions regarding your personal or business taxes, working with a professional makes all the difference. At Bowens Tax Solutions, we serve our Louisville-area neighbors by providing the tax services and knowledge needed to succeed. We are here to assist you with your tax issues and preventative care. Visit our website at www.bowenstaxsolutions.com for more information.