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Originally Posted by Bluefin007  Thanks for your reply. I'm curious to know what steps a taxpayer should take if IRS is still trying to collect after the 10 year period and an installment agreement is in place. |
as mentioned previously, Many taxpayers and some practitioners are unaware that the IRS must collect a tax debt within 10 years. The 10-year period begins to run with the date of the ?assessment,? not the tax year for which taxes are due when you owe money to the IRS, you are NOT on the hook forever; as said, there is a 10 year statute of limitations on IRS collections. This means that the IRS can attempt to collect your unpaid taxes for up to 10 years from the date they were assessed. Subject to some important exceptions, once the 10 years are up, the IRS has to stop its collection efforts. Every year, the statute of limitations expires for thousands of taxpayers who owe the IRS money. In general, the 10-year collection period can end up lasting more than 10 years because it can be suspended for one or more time periods. The time during which the statute of limitations is suspended is not counted toward 10-year deadline. Say, the collections period will be suspended during time periods the IRS is legally barred from taking collection action against you. This means that the limitations period is suspended if you file for bankruptcy and the bankruptcy court issues an automatic stay preventing the IRS from taking collection action against you--the suspension lasts for the period of the bankruptcy case plus 6 months. The period is also suspended while the IRS is considering your request for an installment agreement, offer in compromise, or request for innocent spouse relief, or while you live outside the U.S. continuously for at least 6 months. The IRS can also extend the 10-year period by suing you in federal court; however, the IRS rarely does this. If you're financially unable to pay your tax debt immediately, you can make monthly payments through an installment agreement. As long as you pay your tax debt in full, you can reduce or eliminate your payment of penalties or interest, and avoid the fee associated with setting up the agreement.Before applying for any payment agreement, you must file all required tax returns. A concern frequently voiced by taxpayers is whether entering into an installment agreement with the IRS automatically extends the time the
IRS has to collect. The perception is that if you agree to an installment agreement with the IRS, you are in it forever.Quite simply, you aren?t. IRS installment agreements have end dates. The end date is 10 years from when your IRS liability began
Note: there are a number of other ways the 10-year collection period may be extended. For example, during the period an Offer in Compromise is pending, the statute of limitations is extended accordingly. Similarly, if bankruptcy is declared, while the bankruptcy proceeding is pending, the 10-year statute of limitations on collection is extended by the duration of the bankruptcy proceeding.Many types of court actions may also suspend the running of the 10 years. The filing of an IRS levy or a judgment entered in a Federal Court in a suit by the Department of Justice can also extend the 10-year period. The IRS can ask the Department of Justice to institute a collection proceeding in Federal District Court. If such a proceeding is begun and the US Government prevails, then the statute of limitations on collection on that judgment is extended for the period generally allowed to collect such judgments, and such judgments can be renewed subject to the discretion of the Court. If you need help with a statute-of-limitations problem, please contact The Tax and Business Professionals, Inc
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