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What tactics might be used to recover delinquent taxes?

Have you heard of statutes of limitations? These are laws that elected officials pass that put a time limit on when government can take enforcement or prosecutorial action. There is no statute of limitations on murder. There are on lesser crimes in Minnesota and elsewhere. Even the IRS faces limits on how long it can go after those alleged to have liability for unpaid taxes.

For example, in order to make an assessment of taxes, the IRS typically has to make its move within a three-year time window that starts when a return should have been filed or was filed. The window could open wider if it's alleged that a taxpayer grossly underreported income on the return. After the assessment occurs, the agency has 10 years to make good on its collection efforts.

That gives the IRS plenty of time to close the books on a given case. Different strategies might be used to resolve issues. Considering the arsenal collectors have at their disposal, most experts would likely agree that the most effective route for taxpayers to take is to move swiftly to respond to any notices that might be received. What could happen otherwise? Read on.

  • You could be prevented from leaving the country. Most Americans probably don't have passports. About the only time you might need one is if you plan to travel outside of the country. Under a law enacted last year, seriously delinquent taxpayers could see a passport revoked or a request for one denied.
  • Fines, penalties and more. Time is money as the saying goes and the longer a tax dispute rages, the greater the amount of fines, penalties or interest a taxpayer could wind up facing. Asset seizure is a possibility, as is the loss of a driver's license. Nor can the possibility of public shaming be ruled out.

That last practice isn't uncommon. About half the states allow publication of the names of people who owe back taxes. Even though research suggests it doesn't deliver much, it's still used.

Regardless of how the IRS or state tax collectors choose to do their jobs, if you face a tax debt claim that is significant you should be speaking with a skilled attorney to learn your options.

Source: FindLaw, "What is the IRS statute of limitations or deadline for action on back taxes?", accessed Sept. 1, 2016

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