How Far Back Does the IRS Go for Back Taxes?

by Marilyn Lindblad, Demand Media
    The IRS may charge interest and penalties on late tax payments.

    The IRS may charge interest and penalties on late tax payments.

    Everyone says that the only two sure things in life are death and taxes. However, in the long run, taxes may be less certain. With some debts, such as medical bills or credit card debt, the statute of limitations can cut off a creditor who might try to sue you over an old debt. How far back the IRS can go to collect back taxes depends on your circumstances.

    Statute of Limitations

    Federal law sets limits, known as "collection statute expiration dates," on how long the IRS can collect back taxes from taxpayers. After the expiration date passes, the IRS can't try to make you pay your old taxes. According to the Internal Revenue Code, the length of time the IRS can take collection action against you for back taxes is 10 years after the tax was assessed. You can find out what date a tax was assessed against you by requesting a transcript of your tax history from the IRS.

    Unfiled Returns

    For any year your tax return is overdue and you haven't filed an extension, the IRS can estimate your tax liability and issue a deficiency assessment that starts the clock running on the 10-year limit. If you eventually file a return for that year and you end up owing less tax than the IRS assessed against you, you'll get credit for the reduction in taxes, but the original 10-year limit won't change. However, if you owe more than the assessment, the original 10-year limit stays in place for the original assessment, and a new 10-year period begins for the balance.

    Interest and Penalties

    There may be occasions when the IRS assesses interest and penalties against you in addition to taxes. When that happens, the 10-year collection limit remains the same for the interest and penalties as it is for the existing tax debt. The interest and penalties that you owe get tacked onto the tax assessment as if they had been there all along. If 10 years passes and you haven't paid the amount assessed, the IRS can't make you pay it.

    Bankruptcy

    There are exceptions to the 10-year limit for collecting back taxes. If you file for personal bankruptcy, for example, the bankruptcy court issues an automatic stay of collection on your debts, including any back taxes you owe. The 10-year limit is suspended until six months after your bankruptcy is no longer in effect. After that time passes, the IRS can pick up where it left off in its collection efforts. Whatever time was left on the 10-year clock when you declared bankruptcy is the new limit on how long the IRS has to collect the balance you owe.

    About the Author

    Marilyn Lindblad practices law on the west coast of the United States. She has been a freelance writer since 2007. Her work has appeared on various websites. Lindblad received her Juris Doctor from Lewis and Clark Law School.

    Photo Credits

    • Joe Raedle/Getty Images News/Getty Images