In tax disputes, timing can be just as important as the underlying facts. The Internal Revenue Code contains different statutes of limitations that restrict how long the IRS has to take certain actions. Two of the most important are the time to assess additional tax and the time to collect a tax that has already been assessed. Understanding the difference can help taxpayers protect their rights and make better strategic decisions. A Bethesda, MD tax lawyer can help taxpayers determine which statutes of limitations apply to their circumstances, evaluate the validity of IRS assessment or collection actions, and develop strategies for resolving federal tax disputes.
For assessment purposes, the IRS generally has three years from the date a return is filed to assess additional tax. There are important exceptions. For example, the period can be longer if there is a substantial omission of income, and in cases involving fraud or a failure to file, the normal deadline may not apply at all. This is why the filing date, the contents of the return, and any extensions or agreements signed during an audit can be extremely important. A statute issue can sometimes determine whether the IRS may lawfully assert additional tax in the first place.
For collection purposes, the rules are different. Once a tax has been assessed, the IRS generally has ten years to collect it. That collection period may be suspended or extended by certain events, such as bankruptcy, collection due process proceedings, some installment agreement requests, or offers in compromise. Because of those suspension rules, it is not always easy to calculate the true collection statute expiration date. Even so, the collection deadline can be critical when evaluating settlement options, payment plans, or whether a debt may soon become legally uncollectible.
Statute analysis is often overlooked, but it can create powerful defenses and negotiation leverage. In some cases, it can prevent an improper assessment. In others, it can shape a smart collection strategy by focusing attention on how much time the IRS actually has left. For taxpayers dealing with audits, notices, or old tax debts, understanding the statute of limitations is not a technical side issue. It can be central to the outcome.
At Crepeau Mourges, we have significant experience in tax controversy matters against the federal and state government. We have successfully employed strategies involving proper application of the assessment and collection statutes of limitation. Call us today to see how we can help you succeed.
