Is there a statute of limitations on Tax Debt?

Many people wonder if they can ever outrun their tax debts. Will there ever come a time when the IRS is no longer permitted to collect money from you? Are IRS tax debts entitled to a statute of limitations? Fortunately, the answer is yes. Yes, the IRS does indeed have a limited period in which they can collect the money you owe them. There is a statute of limitations that enables the IRS to try to collect taxes for only a 10-year period. When that specified period expires and the IRS is unsuccessful at collecting your debt, your tax debt, as well as all related IRS issues, is automatically eradicated.

The strategy of not settling your taxes and outwitting the IRS for ten years may seem simple, but it is not. If you ask anyone who has tried running away from their tax debts, all of them will contend that the IRS will utilize all available means and techniques to collect their money. On top of this, a tax lien will also be placed on your credit record and remain there until after the statute of limitations has run its course. The tax lien in your credit score significantly lowers the latter and will keep you from qualifying to any loan no matter what you are trying to purchase. Because of these negative effects, it is necessary that you avoid a lien at any cost.

The most viable solution then involves you working with the IRS so they will not resort to such extreme and rigorous measures. While 10 years is already a very long time, certain occasions give way to the extension of this prescribed period. For example, arriving at a decision for a request of an OIC (Offer in Compromise) takes about one year. During that process, your tax debt is essentially frozen.  If on the other hand your OIC application is denied, the statute of limitations period will continue from the point when the decision was made. As a result, this burdens you with another full year, on top of the prescribed 10-year period.

Another situation that will affect the statute of limitations period is filing for bankruptcy. Since the IRS can't enforce any collection strategy against you while your bankruptcy is in process, again the statute of limitations is essentially frozen and restarts once your bankruptcy is denied. Once again, the statute of limitations on your tax debt is increased.

In spite of many people's belief that the news on statute of limitations only makes matters worse, a few are still grateful of the fact that the IRS cannot chase them down forever. Ten years may be too long at time, and indeed it is, but the bright side is, it is not forever. Fortunately, there are a number of measures available to help those who are faced with an IRS problem lessen its impact. Seeking out assistance from tax attorneys and accountants is the first step in properly dealing with this kind of issue. After all, handling the IRS is an endeavor that should not be undertaken without the help from those who are more well-informed in the area.

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