Statute of Limitations

What Circumstances Allow the IRS to Extend the Statute of Limitations on Back Taxes?

Typically, the IRS has a statutory limit of 10 years to collect back taxes from taxpayers. The clock on the statutory period begins the day the tax is assessed and requires the IRS to mail a written notice to the taxpayer. Once the collection statute date expires, the IRS can no longer take collection actions related to these unpaid taxes, generally speaking. However, there are exceptions to this general rule. And it’s important to know these exceptions because they allow the IRS to extend the statute of limitations, thereby providing the agency more time to collect.

A common reason for a statute of limitations to be extended is when the IRS’s has suspended collections efforts connected to your taxes for specific reasons and/or periods of time. Reasons for the IRS to suspend collections include (but are not limited to):

• If you filed for bankruptcy and the court issues an automatic stay preventing the IRS from collecting from you.
• The IRS is reviewing your request for an installment agreement, offer in compromise, or innocent spouse relief; or you have filed to appeal the IRS’s rejection of an installment agreement, offer in compromise, or innocent spouse relief.
• You’ve lived outside the U.S. continuously for six months or more.
• You served in the U.S. military in certain types of roles, such as serving in combat.

Additional Circumstances that Can Extend the Statute of Limitations on Back Taxes

Other than suspension, the statute of limitations can last longer than ten years in the following circumstances:

• If you voluntarily extend it.
• If you enter an installment agreement with the IRS. In this case, they may request you sign a form waiving the ten-year limitations period.
• If your assets are under control or custody of the state or federal court.
• If there is a lien wrongfully in place.