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IRS Tax Debt Collection Timeline

IRS Collection of Unpaid Tax Debt

One of the most common questions that many people who may have unpaid tax debts wonder is how long the Internal Revenue Service (IRS) is allowed to attempt to collect unpaid taxes from prior tax years from a taxpayer.  Given that the IRS has very broad collection powers that enable the agency to pursue unpaid taxes in a much more aggressive manner than private debt collectors (such as by seizing Social Security payments, filing tax liens against a taxpayer’s residence, and other means), a taxpayer often is left wondering when they will be able to stop worrying about whether the IRS will stop going after their paychecks, their house, or other assets if the taxpayer neglected to pay taxes in a certain year.  Assuming you have unpaid federal taxes, the IRS unfortunately has a long window of time within which to attempt to collect those unpaid taxes from you.  The statute of limitations, a legal term for the amount of time that a party has to pursue legal remedies against someone, for unpaid taxes extends ten years from the date a tax return is due or filed, whichever is last.  This means that a taxpayer may find their banks levied, paychecks being garnished, their ability to sell their house impaired due to a federal tax lien, and other problems for a long duration of time solely as a result of unpaid taxes.

What Is a Statute of Limitations?

Most types of lawsuits and criminal charges carry with them a time limit within which either a case must be filed, criminal charges must be brought, or other legal action must occur.  This is commonly referred to as the statute of limitations applicable to that particular legal action, whether it be the filing of certain criminal charges or a certain type of civil lawsuit.  The statute of limitations sets the time period within which the prosecutor must charge someone, a lawsuit must be filed against an individual, or, in this case, the IRS is able to continue making collection efforts on unpaid taxes.  Once the statute of limitations has expired, then a prosecutor cannot file charges, a person cannot file a lawsuit, or, in this scenario, the IRS must cease collection efforts on unpaid taxes.  Once that time period has elapsed, then the IRS is no longer able to pursue an individual for amounts that person may owe the government from taxes he or she failed to pay in previous years, regardless of the success or lack of success of the agency’s efforts to recover those funds from the taxpayer to date.

What is the Statute of Limitations for IRS Collection Efforts to Recover Unpaid Taxes from Previous Years?

As a general rule, there is a ten year statute of limitations on any IRS collections efforts to recover unpaid taxes owed by a taxpayer. This means that the IRS can attempt to collect your unpaid taxes for up to ten years from the date the unpaid taxes were assessed by any means permitted to the IRS-including garnishing your paycheck or other sources of income, filing a tax lien against your house or a myriad of other methods.  Once that ten years has passed, however, the IRS is required to completely stop collection efforts.  Any unpaid taxes at that point would remain outstanding, but the IRS simply would not longer be allowed to pursue you for payment of those taxes by, for instance, filing a tax lien against your home or garnishing your paychecks

There are, however, factors that can pause the statute of limitations from running, which gives the IRS additional time to collect on unpaid federal taxes.

If you have unpaid federal taxes or is in a long term payment plan and is wondering how long the IRS still have to collect on your debt, contact the experts at Brunoro Law for a free assessment of your case.

Posted in: Cross Border Tax Transactions, International Tax, Tax Audit, Tax Collections, Tax Controversy, Tax Planning

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