The IRS Could Have Decades to Collect Payroll Taxes Owed

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If you owe back taxes, you’re certainly not alone; data from the IRS indicates that over 18 million Americans owed delinquent taxes as of 2014. Furthermore, 10 million taxpayers face penalties every year. What, then, happens to those who fail to pay up? Unfortunately, the consequences can be harsh — and there’s no running away from tax obligations.

When the IRS Statute of Limitations Applies

The IRS imposes a statute of limitations that requires an audit or assessment within just three years – with certain exceptions of course. Following an assessment, the IRS technically has up to ten years to collect. In most cases, collection activities will end after the mandated ten years. The window for collection does not begin until the tax audit has been finalized.

Limits to the IRS Statute of Limitations

Despite the limitations outlined above, ten years of collection activity doesn’t always directly translate to ten years on a calendar. Collection efforts are typically paused during bankruptcy or while negotiating an Offer in Compromise; this pending action may resume months, even years later. Various interactions with the IRS could add several years to your collection timeline, even if the full time of active collection still only totals ten years.

Sometimes, the collection doesn’t merely last three or four years longer than expected — sometimes, the ordeal continues through multiple decades. In the notable case Beeler v. Commissioner of Internal Revenue, for example, Mr. Beeler was held responsible for payroll tax penalties that emerged over thirty years ago. The lengthy timeline was caused, in part, by an IRS error involving the release of a tax lien. Once the IRS finally discovered this mistake, it didn’t waste any time going after Beeler.

Don’t let tax debts from years, even decades ago come back to haunt you. With the proactive team from the Highland Tax Group on your side, you can leave payroll tax problems in the past. Call 720-398-6088 to learn more.