| Many Americans believe that an IRS debt is a debt for | | | | Substitute-for-Return (SFR), they have 10 years from |
| life and that the tax collector can hound them to the | | | | the date they file the SFR to collect from you. If a |
| grave. Thankfully, that is not the case and there are | | | | Federal Tax Lien is on file against you, it expires and |
| statutory time limits on the ability of the IRS to examine | | | | becomes void if the underlying statute expires. |
| and collect taxes. Taxes do expire at some point and | | | | You can find out when the statute expires on your tax |
| in some cases IRS does not get the money they | | | | bill by requesting a Record of Accounts (ROA) from |
| were legally entitled to collect. | | | | IRS for each tax year you owe. If you can't afford to |
| Basically, IRS has 10 years from the date they send | | | | pay the tax, your account might be eligible to be put in |
| out their first bill to collect the tax. The 10 year rule | | | | a "temporary hardship" status. It may be possible to |
| does not apply to the states. Some, like California have | | | | "ride out" the statute in hardship if you qualify. An |
| no statute of limitations and the state tax collector can | | | | impending statute might also be a beneficial factor in |
| indeed hound you forever. The federal tax collector | | | | an Offer-in-Compromise. |
| must get the cash before the clock runs out. | | | | If you have a refund coming to you, you only have 3 |
| For tax assessments made after November 5, 1990, | | | | years from the due date to collect your refund. If you |
| the IRS cannot collect the tax after 10 years from the | | | | file 3 or more years after the due date, the refund is |
| date of the original assessment absent special | | | | lost. In some cases you can peruse a refund beyond |
| circumstances. Special circumstances that may | | | | the three years. If you full pay the tax, you can file a |
| extend the statute are: a bankruptcy not completed or | | | | claim for refund within 2 years of the payment. If your |
| wherein the tax is not discharged; filing an | | | | claim relates to a bad debt or worthless security, you |
| Offer-in-Compromise; or signing a Form 900 Waiver | | | | have 7 years to make a claim. |
| allowing the United States additional time to collect the | | | | The flipside to the 3 year refund rule is that IRS only |
| tax. Also, it is possible for the government to sue to | | | | has 3 years to examine a filed return by audit in most |
| reduce the tax claim to judgment before the 10 years | | | | cases. Now, the tax code is complicated and there are |
| expires. | | | | exceptions to these rules. If you have committed fraud |
| If you never file a tax return, there is no statute of | | | | or tax evasion, there is no statute for audit. There is |
| limitations on IRS requiring you to file, but as a matter | | | | also a 6 year rule for audit in cases of "substantial |
| of policy, IRS generally only requires non-filers to file | | | | omission" of 25% or more in income. But for most |
| the last 6-7 years. If IRS files for you by doing a | | | | folks, the three year statute will apply on audits. |