IRS Penalties

The IRS statute of limitations is in place for a good reason. Many people have fears of the IRS and for good reason with all of the horror stories that are floating around out there. The one thing that most people don't understand is that the IRS is not just "out to get you" and there are laws set in place to protect the people as well. IRS debt is not a lifelong debt and you can not be harassed until death by a tax collector. There is actually an IRS statute of limitations within which the IRS must work to collect their taxes.

Taxes do expire and the IRS must examine and collect these taxes owed within this timeline or they will miss out on the money that they were originally legally entitled to collect. So what is the timeframe on this statute of limitations? The IRS has 10 years from the date that they send out their first bill to you within which to collect their money. This 10 year rule is just the general and the Federal guideline; some states have specific rules to that state. For example, in California there is no statute of limitations on taxes. Be sure that you find out the laws of your state.

There are also special circumstances that may affect the statute of limitations and how the IRS assesses what you owe. If you have never files taxes before, the IRS will generally have you file for the past 6-7 years so they can assess what you will owe and send you a bill. If you have a bill and you need to know when the statute expires, there are simple ways of doing this. All you need to do is request a Record of Accounts (ROA) from the IRS for the years that you owe taxes. If you are worried because you can't afford to pay the taxes owed, there are some special circumstances that you may be eligible for so contact the IRS to tell them your situation and find out what can be done.

This does not only apply to taxes owed but also to refunds. If you have a refund owed to you, then you will only have 3 years within which to file for this refund or it will be lost. If you wait three or more years past the due date to apply for this refund, it will be lost. In most cases, the IRS has only 3 years within which to examine a tax return and audit it. While there are exceptions to this rule, such as if you commit fraud or tax evasion but as long as your file is legitimate, they cannot generally come back after 3 years and file a claim on a mistake in your return.

IRS Penalties |