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IRS Time Limits

Baltimore tax attorneys assisting Maryland and Washington D.C. residents with issues pertaining to IRS collections and statutes of limitation.

The term "assessment" is used when the Internal Revenue Service asserts that a tax is due and attempts to collect it. There are certain statutes of limitations – or time limits – on tax audits and IRS collections. In general terms, the IRS has two important time limits for taxes: three years to audit a tax return, and ten years to collect a debt after it has been assessed. Once the statute of limitations has expired, the IRS can no longer legally take actions to collect the debt.

Rosenberg Martin Greenberg are Maryland tax attorneys with extensive experience helping residents resolve IRS collection problems. Individuals who need assistance understanding their 10-year collection statute are encouraged to contact us for a free case evaluation.

Statute of Limitations for Collections

The IRS statute of limitations period for tax collections is ordinarily ten years. Thus, once a tax assessment has been made, the IRS has exactly ten years to pursue legal action in an effort to collect tax debt. These collections are aided by substantial resources, including wage garnishments and liens.

As with all IRS tax rules, some exceptions apply.

The following may stop the 10-year clock from running, in what’s known as tolling the statute of limitations:

  • Filing an IRS appeal – in most situations, the statute of limitations does not run while an IRS appeal is pending
  • Filing for bankruptcy – the statute of limitations is tolled while taxpayers are under the protection of bankruptcy courts, and for 6 months following a bankruptcy dismissal or discharge
  • Offer in compromise – if an offer in compromise is filed during the 10-year period, the statute is tolled during the review and any appeals process
  • Litigation against the IRS – IRS statutes of limitation on collections does not run if a lawsuit has been brought against the agency
  • Collection due process hearing – In the event the taxpayer files a request for a collection due process hearing (Form 12153-CDP).

The IRS collection period may also be prolonged for the period of time when a taxpayer is living abroad for six consecutive months or longer. In practice, any of the above events or scenarios can extend the statute of limitations for collections, often adding a number of years to the clock.

Tax attorneys typically recommend against pursuing an Offer in Compromise in cases where the 10-year statute of limitations is on the brink of expiring, as the clock is stopped during the entire procedure. An IRS installment agreement may be a better option, and one which Rosenberg Martin Greenberg will explain thoroughly in personal consultation along with all other options available to taxpayers seeking to settle an outstanding debt.

No Statute of Limitations for False or Fraudulent Returns

Note that an income tax assessment and collections may be warranted at any time under the following circumstances:

  • The taxpayer filed a false return in an attempt to evade taxes
  • Other willful attempts of tax evasion are apparent
  • The tax return is not filed as required or is incomplete
  • A federal adjustment report isn’t filed within 90 days of being issued

Statute of Limitations on IRS Audits

The IRS has three years from the date a tax return is filed to conduct an audit. As an example, if the tax return for 2013 is filed on September 1, 2013, the IRS has until September 1, 2016 to audit this return. This time limit can be extended for up to six years if the IRS finds that taxpayers understated their income by 25 percent in any given year. In cases of suspected fraudulent or criminal actions, the statute is removed indefinitely.

Time Limits for Tax Debts in the State of Maryland

In Maryland, the Tax Comptroller has three years to collect state taxes, starting from the date the return was filed or when the taxes were initially due. Taxpayers that receive a federal extension from the IRS get an automatic 6-month extension, after which the comptroller has three years to collect any outstanding taxes. Like most states, the IRS statute of limitations on collections in Maryland stipulates that collection be made within 10 years after the tax assessment date, barring the exceptions outlined above.

Collection Statute Expiration Date

The “Collection Statute Expiration Date” (CSED) marks the day when IRS officers are no longer able to legally collect on overdue taxes. Individuals who are close to approaching this 10-year point should verify this date by requesting copies of pertinent IRS transcripts. Rosenberg Martin Greenberg can assist clients with back tax issues by offering a thorough CSED analysis.

If the statute of limitations has expired, our attorneys will ensure that the debt was accurately written off in the IRS system. Once the IRS has filed a Release of Federal Tax Lien, the process of credit repair can truly begin.

Tax Assistance for Maryland and Washington DC Residents

The Baltimore tax attorneys of Rosenberg Martin Greenberg assist residents of Maryland and Washington D.C. with issues regarding IRS collections and audits.

To arrange a private consultation, we invite you to contact Brian Crepeau at 410.649.4981 or email bcrepeau@rosenbergmartin.com.

Talk to a Baltimore Tax Attorney Today

If you are seeking counsel for a tax related legal matter, contact the Rosenberg Martin Greenberg Tax Controversy experts.

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Phone: 410-727-6600
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Rosenberg Martin Greenberg

705 Melvin Avenue Annapolis, MD 21401
Phone: 410-727-6600
Map & Directions