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Georgia Tax Attorney Explains IRS Statute of Limitations

At Gartzman Law Firm, we help clients overcome their tax problems. Some discussions include the subject of tax debt and in a recent consultation, a client asked about the statute of limitations regarding IRS tax collection, and if it applied to their case. As a tax lawyer in Georgia, I know this topic to be complicated and broad so I prepared general information on the subject, as it may be helpful to others.

The statute of limitations for IRS tax collection is as follows:

  • For Back Taxes: Ten years from the date the first assessment was sent out to collect taxes, plus penalties and interest. However, once the ten-year statute has expired the IRS is prohibited by law to attempt collection on the expired tax debt. Taxpayers still receiving IRS letter after expiration, will need to send the IRS a letter showing proof of the expiration.
  • For Assessment: Three years from the date of actual tax filing. The statute is six years if the taxpayer has omitted additional gross income in excess of 25% of the original gross income amount filed with the IRS.
  • To Claim a Tax Refund: Three years after the date the tax return was filed with the IRS or 2 years after the date the tax was paid to the IRS. To claim a refund, taxpayers will need to send an amended return and file a claim for a tax refund of an overpayment.

When I handle Audit Defense cases in Georgia, I remind clients that the ten-year period begins with the date of the assessment (the date the tax liability is assessed) not the tax year for which taxes are due. Once an official at the IRS signs an assessment, the ten-year clock begins ticking. Adjustments including interest and penalties (including late payment penalties) get added to the original tax assessment within the ten-year time frame. Note: The statute of limitations is waived in all cases where the IRS suspects fraudulent or false tax reporting with intent to evade taxes.

Naturally, there are exceptions or special circumstances that can extend the length of time for collection. In my experience as a Georgia tax attorney and CPA, the time extension is so that the IRS can review the circumstances and validity surrounding the assessment.
Some of these include:

  • Bankruptcy filings
  • Offer in Compromise
  • Collection Due Process Appeals
  • Innocent Spouse Relief
  • Signing a waiver Form 900 and installment agreement. This is a contract between taxpayer and IRS that suspends enforced collection in exchange for a taxpayer payment installment plan and consent to extend the collection statute of limitations. *(As a Georgia tax attorney, I do not advise signing any agreements with the IRS until you have consulted your tax professional.)

Some types of court actions can also suspend the ten-year clock.

Important point: The points above are for federal statues, states have differing laws. Georgia tax lawstates the statute of limitations is three years after the date the return was filed for assessment and seven years for collection, which can be pursued indefinitely. Some states, such as California do not have a statute of limitations so collection efforts can go on indefinitely.

It is not advised to directly deal with the IRS especially in cases where the statute of limitation is set to expire. These statutes are complicated and you won't get much help from IRS. They are not so apt to be of assistance in cases where they ultimately have nothing to collect. As an Atlanta tax lawyer and CPA, we represent clients in these cases by gathering all their data and analyzing their unique set of circumstances. A professional tax lawyer or CPA can confidently deal with the IRS directly on a client's behalf to sort out complicated tax problems and take the necessary steps to avoid further collection attempts and help put this situation safely in the past.

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