What is the 10 year Collection statue Bucks / Montgomery PA?

Services for Real Estate Pros with Trusted Tax Resolution

I represent taxpayers in Bucks and Montogomery county PA with tax issues.  Today, I will briefly discuss one of the 10 year Collection statute & why it is so important.

How long does the IRS have to collect money from me?

The answer is typically 10 years from the assessment. However, there are some exceptions.

First, the IRS cannot collect any money from you until there is an assessment. What is an assessment? An assessment is simply the recording of your liability with the IRS. What makes an assessment significant is the IRS cannot collect any money from you until there is first an assessment. 

With our voluntary tax compliance system, filing a tax return with the IRS is considered to be a self assessment. If you file before the April 15th due date, the assessment date is April 15. If you file after April 15th, the assessment date will be the day the assesses  your tax liability  against you, not the date you filed.

There a few things that could extend the 10 year Collection statue:  If you ask for an installment agreement, or file an Offer in Compromise, the 10 year Collection statute will be extended. Filing bankruptcy also extend the statute.

How long after I file can the IRS audit my return?

So the IRS has 10 years to collect the liability from you, but what about auditing my return?  Generally, the IRS has 3 years from the date you filed to audit your return. Just like the assessment date, if you file on or before April 15th, the IRS can audit your return 3 years from April 15th. If you file after April 15th, the IRS can audit 3 years from that assessment date.

There are some exceptions: (1) If you have 25% or more gross omission of income, the IRS can audit your return up to 6 years after the assessment date (not 3 years)  (2) If you commit fraud or intentionally evade taxes, the IRS can audit your return at any time. 

What happens after 10 year Collection statute runs out?

If the 10 year Collection statute expires, the IRS is required to "write off" the tax liability plus penalties and interest. More importantly, the IRS cannot continue to pursue collection. However, do not feel comfortable yet. When the 10 year Collection statute gets close to expiring, the IRS will make on last attempt at colllection or try to obtain a judgment against the taxpayer to protect the government's interest.     

If you or someone you know has a tax issue, please call me at 215-316-3437 or email me at steve@trustedtaxresolution.com  for a free consultation. IRS problems do not go away by themselves.

Steven Buonomo CPA

Trusted Tax Resolution

1016 Mill Creek Road

Feasterville, PA 19053




Comments (1)

Michael J. Perry
KW Elite - Lancaster, PA
Lancaster, PA Relo Specialist

The IRS isn’t looking for an extra $100 in taxes from someone. They are looking for thousands of dollars .

Jan 16, 2021 12:08 PM