Taxes The IRS And You
January 12, 2010 in Taxes
DEATH AND TAXES- as the adage goes. Well I do not know about death but as you have already read in my October 8, 2008 article taxes are not so certain.In addition to the dischargeabillity of certain taxes in Bankruptcy, Congress has passed a section of the Internal Revenue Code that limits the IRS from collecting taxes past a certain time. Section 6502 in pertinent parts says “… Length of Period… where the assessment of any tax imposed… has been made… such tax may be collected… but only… (1) within 10 years after the assessment of the tax”.
In plain English, this means that when you file a tax return and have been assessed the tax, or if you were audited and a new assessment was recorded, the IRS has only ten years to collect this tax from the assessment date. There are certain conditions that interrupt the statute such as, a Bankruptcy, an Offer in Compromise, or a Due Process Hearing but basically the ten-year rule will be exactly what Section 6502 indicates.
Additionally, if a taxpayer does not file a tax return and the IRS under Section 6020(b) files a “dummy” return, the ten-year collection statute is still applicable.
Time and space constraints do not allow me to go into extensive detail on other statute’s of limitations. Briefly, there is no statute of limitations for filing a tax return. There is a three-year statute of limitations for the IRS to audit a filed tax return unless there is an unreported amount of income in excess of 25% of adjusted gross income. The statute then is six years for that audit.
Article provided to the La Quinta Chamber of Commerce – GEM Publication January 2009 page 11.
