Accounting News and Notes

^{Gwinnett CPA on Statute of Limitations on IRS Collections}

CPA Serving Atlanta GA & Beyond

^{Knowing the ins and outs of tax law can do much to help you along the way to make sure all of your tax issues are well understood and handled. Tax law is complicated, understanding some of the individual nuances will always be of great assistance. One way to be sure that you do not run afoul of a few of the basics will help you make wise and informed decisions. Just as a physician first strives to get a good understanding of the patient, their history and their symptoms before offering a diagnosis, so it is critical for a CPA to understand the underlying causes and tax problems, to address their causes and effects and to review original source documents that originally caused the liability to start with. If the taxpayers proceeds with haste rather than wise and judicious discernment, they may well lead themselves to far greater financial pain than originally existed. These basic tenants of IRS Statutes of Limitations will do much to enlighten potential tax opportunities and planning:}

^{Statute of Limitations on Refunds}

^{If you file a corporate or personal income tax return more than three years after the original returns due date, then any attendant refunds are lost forever. You cannot apply them to other outstanding years, you can not apply them to future years, as you get absolutely no credit for them at all. This is perhaps one of the greatest tax tragedies as I have personally witnessed taxpayers who would have otherwise received thousands and thousands of dollars of refunds forever legally lose their claim to any potential refund. Unfortunately there are no appeal options and once the three year statue lapses, it is over, you “cannot pass go” and your refund is forever lost.}

^{Ten Year Collection Period}

^{There is a ten year Statute of Limitation on the Internal Revenue Service ability to collect taxes. The ten year statute begins generally form the date the original return was filed or when the tax was assessed by the IRS. During the ten year tax period the IRS is able to use all of its collection tools including liens, levy, garnishment and seizure to protect the rights and interest of the Treasury Department/United States government. After the ten year period lapses the tax is no longer assessable by the Service. However during the ten year period, the taxpayer and the IRS may jointly agree to waive the ten year statute and extend the collection period. This may be advantageous when a taxpayers ability to pay may be improving and enforced collection efforts might prove to have disastrous effects.}

^{Suspension of the Waiver Period}

^{Generally speaking the statute of limitation period lapses after ten years after the return is originally due, filed or assessed. However there are several items which can legally extend the time period that the IRS has to collect outstanding monies. For the items below, the ten year statue is extended for the time the following events were occurring.}

^{Installment Plans. The time that a taxpayer  is on a on a plan making regular monthly payments/an Installment Plan is not counted as part of the ten year periods lapsing and is therefore added to and extends the ten year original period.}

^{Suspension of Collection Efforts. If the IRS suspends collection efforts for a time in a effort to work with the taxpayer during legal or tax filings, this period as well is added to the ten year period when determining the statute of limitations. The most common examples of these would be time periods covering Installment Plans, submission and consideration of an Offer in Compromise and the periods covering that of a Bankruptcy filing.}

^{Tax Fraud. In the event that a taxpayer commits tax fraud there is no statute of limitations on either collections or for the auditing of applicable returns.}

^{Often toward the end of the ten year period, taxpayers will discover that collection efforts intensify as the Internal Revenue looks to collect any open tax monies due.}

^{Written by author John Dillard CPA of His CPA at 770 814 9304 and visit http://www.hiscpa.com/ (a Christian CPA firm). At His CPA we march to the beat of a higher drummer where we put the “Golden Rule” to work each and every day by “Serving Him by Serving You…One Tax Return at a Time.”}

^{We advise clients on: IRS representation, Offer in Compromise, Tax Problems, Incorporation in Georgia, Corporate and Personal Income Tax Returns, Part-time CFO, Virtual Controller, Business Planning, Payroll Administration, Bookkeeping.}

^{Serving New York, Los Angeles, Chicago, Houston, Philadelphia, Phoenix, San Antonio, San Diego, Dallas, San Jose, Detroit, Indianapolis, Jacksonville, San Francisco, Columbus, Austin, Memphis, Baltimore, Fort Worth, Charlotte, El Paso, Milwaukee, Seattle, Boston, Denver, Louisville, Washington D.C., Nashville, Las Vegas, Portland, Oklahoma, Tucson, Albuquerque, Long Beach, Atlanta, Fresno, Sacramento, New Orleans, Cleveland, Kansas City, Mesa, Virginia, Omaha, Oakland, Miami, Tulsa, Honolulu, Minneapolis, Colorado Springs, Arlington}

Related posts:

1. Alpharetta/Lawrenceville/Suwanee CPA Helps Taxpayers Understand Tax Penalty Assessment and the IRS Statute of Limitations on Collection of Unpaid Taxes… The IRS/Tax Representation Series
2. How to Use an Offers of Compromise with the Internal Revenue Service
3. Georgia Offers of Compromise www.HisCPA.com
4. Gwinnett CPA Firm on Addressing Back Tax Issues for Atlanta Taxpayers for Decades
5. Gwinnett CPA Advises Atlanta Taxpayers on the Filing of Back Taxes & Old Income Tax Returns

This entry was posted on Friday, December 5th, 2008 at 2:20 pm and is filed under Atlanta IRS Tax Problems & Offer in Compromise, Atlanta Tax Problems & Tax Advocacy.
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