Lawsuits, debt collections, and taxes are words that you very likely don’t want to hear. They are, however, necessary for the symbiotic relationship between the government and its citizens.
When you have unpaid taxes, a timer begins for the IRS because, as you’ll soon find out, they can’t chase you forever. Let’s take a deeper look into the IRS statutes of limitations and explain how this could affect your tax situation.
By definition, a statute of limitations is a federal or state law limiting the period allowed for the IRS to file legal proceedings against an entity. This means if you wanted to charge someone with a crime or bring a lawsuit against them for damages, you’ll need to have done so prior to the statutes’ expiration.
In the case of the IRS, the statute defines how long the IRS can take to collect a tax debt. The collection statute expiration date marks the end of the limitations period.
After the limitations period ends, no action can be taken, and the agency can no longer collect the debt. But, it doesn’t mean you get off scot-free as we’ll define later.