Services: Statute of Limitation
Just like a “slip and fall” case has its applicable statute of limitation, tax cases have statutes of limitation too. This section discusses tax statutes of limitation.
Questions:
1.How long does the IRS have to collect money from me?
2.Why did the IRS keep my refund?
3.How long does the IRS have to audit my tax returns?Answers:
1. How long does the IRS have to collect money from me?
After a tax return is filed, the IRS generally has ten years from the date of assessment to collect the tax from you. If the IRS does not collect the tax within ten years, it may be barred from attempting to collect from you. There are ways that the ten year period can be extended, including the filing of an Offer in Compromise, the filing of a bankruptcy, signing a waiver or others. Unfortunately, the collection statute of limitation does not begin to run until you file your tax return or an assessment is made.
refund listed on his 1040 tax returns. Our taxpayer was afraid to contact the IRS, not wanting to “wake the sleeping giant.” Patrick T. Sheehan & Associates obtained internal IRS documents to determine when the collection of statutes of limitation for various years would expire. Patrick T. Sheehan & Associates obtains this information in a “friendly fashion” from the IRS, meaning that we “do not wake the sleeping giant.” We were able to calculate the expiration of the statutes of limitation and advised the client to take no further action until the collection period had expired. Patrick T. Sheehan & Associates subsequently obtained internal documents verifying that the liability was no longer collectible, that the liability was abated to zero and took steps to ensure that all of the federal tax liens were released.
Case Study: In this case study, after many years of taking no action at all, the IRS contacted our taxpayer and demanded full payment of the older liability. Because our taxpayer could not pay the older liability in full, the IRS demanded outrageous and unreasonable monthly installment payments to pay the liability in full within a very short period of time. After retaining Patrick T. Sheehan & Associates, we determined that the collection statute of limitation was about to expire in approximately five months. The IRS was pressuring our taxpayer to pay the liability in full before it could no longer legally collect the funds from him. Patrick T. Sheehan & Associates was able to negotiate a reasonable settlement which allowed the collection statute of limitation to expire on the older liability.
If you have an older tax liability and question whether the IRS can still legally collect from you, please call us. We can obtain internal IRS documents to determine whether the IRS is legally entitled to collect this liability from you. Patrick T. Sheehan & Associates, Attorneys at Law, P.C., has successfully calculated the expiration of the collection statute of limitation and provided advice regarding this issue to its clients since its inception in 1991. If you would like us to calculate the expiration date of the collection statute of limitation in your case, call us. We can help. Call us before the IRS calls you!®
2. Why did the IRS keep my refund?
The IRS will typically keep or delay your refund if you have unpaid liability for other years, if you have unfiled tax returns, if you are in bankruptcy or if you are under audit. There is also a statute of limitation on refunds where the IRS is barred by law from sending a refund on an older tax return to you. Most people do not realize that the law can bar the IRS from sending a refund to you if you do not act within the time period for doing so. If your tax return was due greater than three years ago, the IRS may be prohibited from issuing a refund for that year. However, if the tax was actually paid within the last two years, the IRS may be able to issue that refund. There are also some very limited exceptions to the refund statute of limitation if you were sick or otherwise disabled.
Case Study: In this case study, our taxpayer retained Patrick T. Sheehan & Associates who was successful in getting the IRS to abate prior audit liabilities. Because the years in issue were greater than three years ago, the IRS initially took the position that our taxpayer was not entitled to a refund. Patrick T. Sheehan & Associates demanded that the IRS consider the day on which we filed our taxpayer’s claim as the date the claim for refund was made and that our taxpayer was entitled to a substantial refund. After much negotiation, the IRS agreed with the position taken by Patrick T. Sheehan & Associates and our taxpayer subsequently received a substantial refund.
Patrick T. Sheehan & Associates, Attorneys at Law, P.C., has successfully obtained refunds for many of its clients since its inception in 1991. If you believe that the IRS has improperly seized or delayed your refund, call us. We can help. Call us before the IRS calls you!®
3. How long does the IRS have to audit my tax returns?
The IRS generally has three years after a tax return is filed to audit that tax return and to assess additional tax. However, if there is a substantial omission of gross income on the tax return (25% or more), the IRS has six years after the tax return is filed to audit that tax return and to assess additional tax. Finally, the IRS can assess tax at any time if no tax return is filed, or if there is fraud or an attempt to evade the tax on the return that was filed.
When conducting an audit, the IRS typically starts with one year. If the audit for that year reveals no problems, the IRS may close the audit without expanding it to other years. If the IRS finds discrepancies within that year, it often expands the audit to other years, typically a total of three years. Patrick T. Sheehan & Associates, Attorneys at Law, P.C., has successfully represented many taxpayers in audits before the IRS since its inception in 1991. If you are under audit, or have received a notice that you are going to be audited, call us. We can help. Call us before the IRS calls you!®
1-877-4-IRS-LAW