How Long Does the IRS Have to Pursue a Balance That You Owe?

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If you owe a balance to the IRS, you may be tempted to hold off on paying until collection on that balance is no longer possible. Unfortunately, if that’s your plan, you are in for a long wait. During that time, you risk interest payments, liens, levies, and a whole host of other devastating consequences.

The good news? You are not on the hook forever. Unfortunately, the IRS may behave more and more aggressively as the expiration date for collection draws near. Below, we discuss the statute of limitations in greater detail—and help you determine whether it’s worth the wait.

IRS Statute of Limitations

That statute of limitations on IRS collections is ten years. The limitations period begins the date of the tax assessment. Essentially, you’ll receive a bill if you fail to pay in full; the date on that bill marks the beginning of the limitations period. However, if you simply fail to file a tax return, the IRS may create a substitute return and use a deficiency assessment.

Sometimes, the statute of limitations can technically extend beyond ten years — if it is suspended. Typically, suspensions occur during times in which the IRS cannot legally pursue collection. For example, if you file for bankruptcy, the IRS is prevented from taking collection action the moment the court issues an automatic stay. The statute of limitations may also be suspended as the IRS considers your eligibility for an installment plan.

Should I Wait to Pay Up?

In many cases, the answer to this question is a resounding no. Consequences such as levies and liens are often far worse than simply paying, especially if you’re able to obtain an Offer in Compromise or some other payment plan. It’s certainly not worth waiting if you owe a balance from just one or two years ago. There’s no need to live in fear of the IRS for nearly a decade.

Whether you owe on recent taxes or are nearing the statute of limitations, it behooves you to work with an enrolled tax agent. Contact Highland Tax Resolution to learn more about your options for dealing with the IRS.