Statute Expiration

The IRS does not have an unlimited amount of time to collect tax debt. Tax laws are such that all debts must be collected within 10 years of being assessed. After this 10 year period, the debt expires.

When does this 10 year period officially start?

It begins when the tax amount is assessed, which is generally whenever you file taxes. If you failed to file taxes, the tax assessment would likely have happened when the IRS filed a Substitute For Return on your behalf.

Statute expiration is specific to each assessment date. If you have tax debt from multiple years, it’s important to remember that the start date of your assessments can be different for each back tax.  Because of this, you might have multiple expiration dates for whatever tax debt (and penalties and interest on the debt) you owe.

How do I know if a statute is expired?

  • To qualify for CNC status, you will need to show that making a payment toward your tax debt would cause a hardship. This means that you would need to have only enough money for necessary living expenses (such as rent and groceries), or even less than that.
  • You will need to show an inability to pay a monthly payment of $25 or more.
  • You will need to have no assets that the IRS would consider worth levying. A levy is a seizure of your assets, such as a property or automobile.
  • You will need to call the IRS and/or file a form with information about your difficult financial status.
  • You many need to provide documentation of your financial status.

If you have already experienced a levy, you still have options to resolve it. The IRS would rather resolve your tax debts in ways other than a levy and provides options to do so.

There are also some reasons that a statute expiration can be extended. An extension can happen because of an installment agreement’s terms, a pending Offer In Compromise, a bankruptcy, certain military statuses, and among many other things. These reasons are often specific to your own circumstances. If you are confused about whether or not you could have an extension in place, you should consider consulting a tax expert who can review your tax history and find out for sure.

If you have tax debt that you believe is past or approaching the 10 year expiration mark, contact a tax expert today to make sure you do not pay any debts that are no longer legally collectable. A Vanguard Tax Relief expert can help you figure out your exact statute expiration dates for any tax debt you have, as well as whether or not you might have an extension in place. Regardless of the situation, our tax experts can help ensure that you do not pay any more than you are legally required to.

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