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Statute of Limitations on Owed Taxes

Auditing

There are separate time limits for collecting on owed taxes and for auditing a filed return. The IRS can audit a return up to three years after the return is filed. After three years the agency can no longer audit the return or assess additional taxes.

Tax Collection

Tax collection is on a longer time frame than auditing. The statute of limitations on tax collection is 10 years from the date of assessment. During this time, the IRS can attempt to collect the owed taxes in a number of ways. It can levy your bank accounts, put a lien on your property, and send letters or call your house to try to get in touch with you about your back taxes.

Claiming Refunds

There is also a statute of limitations on claiming refunds. If you have filed back taxes and are owed a refund for that year, you must claim the refund within three years. This also applies to previous overpayment of taxes.

Exceptions

There are exceptions to the statute of limitations for auditing and collection. The main one applies if the IRS finds that you have filed false information on your return for purposes of tax evasion, by underreporting income, for example. Tax returns that are prepared by the IRS also avoid the statute of limitations.

State Taxes

State and federal taxes are separate areas when it comes to statutes of limitations on collection. Many states, according to the credit counseling firm Carreon and Associates, do not have a statute of limitations on taxes at all. This means that state taxes can be collected on indefinitely.

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