One of the possible solutions in any IRS back taxes problem is that the collection statute of limitations that may run. Now, what does that mean in English? Well, it’s a little known government secret that there is a ten-year statute of limitations for the collection of income tax.
Again, what does that mean in English?
Well, it means that they only have ten years from the date that the tax liability ends up on the books to get it from you, and if they don’t get it from you during that ten years, you win, they lose. I know that’s really hard to believe, but we see it happen all the time.
Now, the Collection Statute Expiration Date or the CSED or sometimes you’ll hear it called the CoSED is also sort of considered a top secret situation. So one of the things that we do for every client in an IRS problem case is we go ahead and get a power of attorney signed by them which allows us to communicate and represent them before the IRS.
It allows us to go ahead and be the buffer between them and the IRS, and it’s actually against the law for the IRS to contact the taxpayer while knowingly having a 2848 on file. So that’s an important buffer.
Once we get the 2848, we file a Freedom of Information Act request and we get the transcript information from the IRS. And one of the transcripts that we get actually has the super secret, top secret date on it. It allows us to know if some or all of the tax liabilities are actually getting too old or getting quite close to the CoSED or the CSED date, quite close to the date in which they’re longer collectible.
So again, the IRS only has ten years from date of the assessment of the tax. Sometimes it comes into play, sometimes it doesn’t, sometimes currently not collectible status can be a help in the situation, sometimes maybe you’re contemplating a tax bankruptcy and it’s not necessary because the CoSED is getting really near.
If you have questions about your back taxes or you want more information about these types of situations with IRS problems, I would invite you to give us a call at (888) 438-647.