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Is there a statute of limitations on IRS collection of taxes?

For nearly every legal action, there is a point after which the case cannot be pursued. This is called the statute of limitations. Under Minnesota law, the shortest period of time in which a civil case can be brought is two years. The shortest period for criminal cases is three years. There is no statute of limitations in cases of murder.

When it comes to tax-related issues, there are some limits, too. For example, if you and the IRS agree that you owe a great deal in taxes, but your financial situation is such that you can’t pay them and also cover living expenses, the agency might grant a request to list your status as “currently not collectible.” This does not mean you are off the hook.

What it does is start a clock ticking that ostensibly runs for 10 years. But that time limit can fluctuate. It will run at least 10 years, but certain conditions can put a hold on the second hand – extending the IRS’ window of opportunity by an indeterminate time. And it’s crucial to know that the liability you face under CNC status doesn’t remain static. Penalties and interest charges will continue to accrue. If no action is taken to reduce the debt, what is now an uphill financial strain can become an insurmountable monetary barrier.

Obtaining CNC status may provide a taxpayer a bit of breathing room. But it is space you should plan to share with an experienced attorney who can help develop a strategy for resolving the liability in a way that you can manageable and the IRS will accept.

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Pridgeon & Zoss, PLLC
7301 Ohms Lane, Suite 420
Edina, MN 55439

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