Owing The IRS - Can I Wait Out My Tax Debt?
Ticking away...
The IRS has a limited amount of time that they can collect on a tax debt.
That is if you think of 10 years as a limited amount of time.
The time that the IRS has to collect on a debt is called the Statute of Limitations.
If you're unable to payoff your debt by the end of the Statute then the debt is dismissed and you don't owe any additional amount.
A long wait...
The Statute is the amount of time the IRS has to collect, that doesn't mean you can put off paying your tax debt for 10 years and think that the IRS won't do anything to you.
The IRS will still use every collection weapon it has in its arsenal against you.
Time is not on your side...
The 10 years for the Statue of Limitation isn't set in stone either.
There are 3 factors that can extend the length of the Statute of Limitation and allow the IRS more time to collect on your debt.
In answer to the question of whether you can wait out a tax debt the answer is yes.
But do you want to? 10 or more years are a long time to live with a debt, and it can seem like a lifetime if the IRS is hounding you constantly.
Now you have the smoking gun...
Use it!
The IRS has a limited amount of time that they can collect on a tax debt.
That is if you think of 10 years as a limited amount of time.
The time that the IRS has to collect on a debt is called the Statute of Limitations.
If you're unable to payoff your debt by the end of the Statute then the debt is dismissed and you don't owe any additional amount.
A long wait...
The Statute is the amount of time the IRS has to collect, that doesn't mean you can put off paying your tax debt for 10 years and think that the IRS won't do anything to you.
The IRS will still use every collection weapon it has in its arsenal against you.
Time is not on your side...
The 10 years for the Statue of Limitation isn't set in stone either.
There are 3 factors that can extend the length of the Statute of Limitation and allow the IRS more time to collect on your debt.
- If youdeclare bankruptcy it can take some time before it gets discharged.
The good news is that while you're inthe bankruptcy process the IRS can't take collection action againstyou.
The bad news is that theamount of time you were in the bankruptcy extends to time of theStatute.
For example if it took youtwo years for your bankruptcy to get discharged, then 2 years gets addedon to the Statute of Limitations.
- If youattempt to get your tax debt reduced by applying for an Offer inCompromise with the IRS.
An Offerin Compromise can take a year or more to reach a resolution.
Much like a bankruptcy the length oftime it takes for the Offer to be approved or denied increases the lengthof the Statute.
- Oftenwhen you enter into an Installment Agreement to payback the IRS on amonthly basis you have to sign an agreement extending the length of theStatute of Limitation by up to 5 additional years.
In answer to the question of whether you can wait out a tax debt the answer is yes.
But do you want to? 10 or more years are a long time to live with a debt, and it can seem like a lifetime if the IRS is hounding you constantly.
Now you have the smoking gun...
Use it!
Source...