When the IRS reaches out to you and tells you you have a tax balance, they will give you ten years to pay for it. When you get this memo, the first thing you need to do is determine the start date for your tax debt. Only then would you know when your ten-year deadline would be so that you can prepare accordingly.
If you receive a tax balance notification, here is what you need to do:
Know When the Tax Liability Is Recorded
Contrary to what people think, the start date for the ten-year deadline is not on the day you received your notification. The Statute of Limitations starts when the tax liability gets recorded and signed by the assessment office. Here is the usual timeline to give you an idea of how long it takes the IRS to process everything:
- An electronically filed return will take five to six weeks of assessment
- A paper filed return will take weeks longer than the electronically filed document
Should you want to learn the actual date of assessment and filing, you can call the IRS directly and ask for the tax account transcript of the year in question. It is essential that you know the exact date so you would know your Collection Statute Expiration Date.
Defining the IRS Terminologies
- Statute of Limitations – The whole duration that the IRS has to collect all due taxes
- Collection Statute Expiration Date (CSED) – The last day of the Statute of Limitations or the final day the IRS has to collect the tax debts (including all penalties and interest)
The Tax Debt Assessment and Collection Date Confusion
Confusion grows when a person gets more than one assessment and collection date in a year. They happen when the following conditions happen:
- You can get your first assessment date when you first submit your documents
- When your return is audited and you submit for the missing additional tax, you can get your second assessment date
- When you decide to make corrections to your original paper, you may get your second or third assessment date
Not amending your papers can also result in more than one collection date if you have other tax penalties. Each has its own CSED. That includes:
- Estimated tax penalty
- Deposit penalty
- Delinquency penalty
- Negligence penalty
- Fraud penalty, and
- Various civil penalties
Even if you did not submit an income tax return, you can still have the other companies that filed their tax returns note it. For this case, you will receive another kind of document called the Substitute for Return (SFR). This is the return prepared by the IRS themselves, given all the information from other sources. With this, you would no longer have the ten-year deadline. Instead, you get only three years. But like the Statute of Limitations, it can be extended.
What Happens If You Go Past the Ten Year Deadline
There are instances when the CSED automatically gets extended. Still, if you are nearing your CSED and think you need more time to finish everything, it would be best to contact a tax professional and examine your options.
As a taxpayer, make sure that you file your return every tax year and comply with any next steps necessary. Contact the IRS directly to know your assessment and collection date and keep an eye on it. Make sure you avoid further problems by not neglecting your dues or seeking help from those who know.
If your taxpayer’s debt is too big for you to handle and you want to reduce it, you can apply for the IRS debt forgiveness program or find other tax relief solutions, turn to us at Axiom Tax Resolution Group. We can work directly with the IRS on your behalf. We know their rules and understand what they want, so we can help you take advantage of the existing tax relief programs. Reach us via 844-8-Tax-Pro (1-844-882-9776).