QUESTION
Is income tax debt for private citizens nullified after 10 years, from 2000-2001?
Asked on Sep 14th, 2013 on Taxation - Michigan
More details to this question:
IRS TAX LAW Question on Private Citizen's debt: My family has an IRS Tax debt situation. I have laid out the timeline shown below 2001 - April - Dad Passes Away due to Cancer - he completes the taxes for 2000. I am his and my mom's concerned son trying to get more info on this - and my mom has been somewhat private on the details. 2002 - April - Taxes for 2001 are due and my Mom doesn't understand all of the tax laws, and doesn't pay part of the taxes on my Dad's work pension (or something - exact information has not been given to me) to the effect of 20k. She hasn't told me all the details for privacy 2003 - April - Tax debt begins to accumulate as Mom is unaware of the debt. 2001 to 2013 - Tax debt accumulates on interest to the effect of something like 125k (or so last we heard), my mom moves twice during this time breaking continuity from being able to get mailed info about the debt and loses track. She actually doesn't even find out about the tax debt in 2009 (or so she says). She doesn't have the money to even begin paying it back. So now it's 2013, and my mom hasn't received any information on the IRS tax debt for about a year. And we are wondering the following: 1. we don't want call the IRS to find our more info/ask about our debt because we don't want to be red flagged on their radar to come up for garnishments - is this a legitimate concern? Would they start identifying us for garnishments if they knew we called and were worried about this? 2. Hasn't this tax debt gone on for longer than a Law I've read about while researching this saying that IRS Tax debt is nullified after 10 years if they cannot get it paid back or hold private citizens accountable? But we can't/won't check because of concern #1. 2.a. If it is nullified, do we need a tax lawyer to help us close this out, or should we just call the IRS and verify that we need to pay zero on my mom's SSN? Also meaning that concern from #1 is invalid.
2 ANSWERS
Business/ Commercial Attorney serving Bellevue, WA
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Lana Kurilova Rich PLLC
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There is a 10-year statute of limitations on the IRS collections, but it runs from the date of assessment. In other words, if the tax return for a given year was never filed, that statute never starts to run. If the return is filed in 2001 for tax year 2000, the 10-year clock begins ticking from the date the return was filed (or the date the return was due, whichever is later). I usually find out the exact statute expiration date for each period by simply calling the IRS, since each tax year will have its own statute expiration date (and again, the clock never even starts if the tax return is not filed, which happens). Depending on your mom's situation, if the tax is attributed to her deceased husband, she might be able to claim "innocent spouse." Alternatively, if she does not have sufficient funds, she may qualify for a "currently not collectible status." Finally (and again, if she qualifies), she may be able to file a successful offer in compromise, thereby settling her IRS debt for a fraction of the total amount owed. This process can be complex, so I do not recommend doing it on her own. There is no harm in her contacting the IRS. The truth is, the IRS can very easily find her Social Security pension she may be receiving and garnish it. The IRS can easily find where she banks and where she works. Anything that is attributed to her Social Security number is within the IRS powers to locate, so it is just a matter of time. All too often, clients come to me when they have an unpleasant wake-up call, such as the IRS just cleaned out a person's bank account, or Social Security pension is being garnished, or a person's employer notifies him/her of a wage levy. Those things get the taxpayers' attention right away. But there are ways to prevent that aggressive collection action from taking place. If you learn anything from this reply, learn this: Doing nothing and hoping that the IRS will just go away or let the 10-year statute run up is not an option. I recommend either addressing the problem head-on on your own by calling the IRS or consulting with a professional who can help.
Answered on Sep 19th, 2013 at 12:41 PM
Appellate Attorney serving Grosse Pointe Farms, MI
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Musilli Brennan Associates, PLLC
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Yes, you, actually your mother, need a tax knowledgeable lawyer and to provide to the lawyer all of the facts for an opinion. There could be statute of limitations which could preclude the IRS from collecting.
Answered on Sep 18th, 2013 at 2:45 PM