IRS Statute of Limitations

IRS Statute of Limitations and How You Can Benefit From It


Statute of Limitations – What are the Rules and How Do They Work

The statute of limitations provided by the IRS is one method some individuals use to resolve back taxes, however, it is the one method that they keep hushed about. When the IRS sends you an initial assessment of back taxes notice, the IRS then has a maximum of ten years from that date to collect the taxes owed. Do not go for this method if you have just recently been assessed because it can mean many years of IRS-related misery as they attempt to collect owed taxes. If an individual has been under the classification of “currently not collectable” for a long while, they can reach a point at which the statute has expired.


This statute also takes into effect if the IRS fails to review your taxes within a period of three years after a tax return is filed. The only way, in this situation, where the statute would not apply is if you filed a tax return that was fraudulent, whereby you understated your taxes by a minimum of twenty-five percent. However, it is a very rare occurrence when an IRS agent forgets the limitation statute. However, errors can be made, and in these cases, the taxpayer will get away without having to pay a penny of the owed tax amount.


However, the most common regulation is the ten year rule from the date of assessment. If this cut-off date approaches, the IRS may try to make last minute efforts to reset the statute by making you do a certain action.


How Can the IRS Extend the Statute of Limitations?


  • Most often, the IRS will file a suit against you in court. However, this occurrence is very rare if the amount owed in back taxes is not a significant amount. In IRS standards, the amount owed needs to be over $250 thousand dollars to warrant this kind of action. If it is under this amount, the IRS will allow the statute to expire.
  • If you choose to file an Offer in Compromise
  • You have been currently residing outside the United States
  • If you make a request for a Taxpayer Assistance Order
  • If you request to file Chapter 7 or Chapter 13 bankruptcy
  • Sign a form to waiver the statute


There are some of the more common ways to extend the statute, but there are other methods the IRS can employ. To learn more, it is advisable to speak directly with a tax specialist. They are especially helpful in situations where you believe you have exceeded the statute but the IRS is attempting to take action.


Which is the best strategy for you? Find out now.

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