Scottsdale, AZ asked in Tax Law for Arizona

Q: Can an federal IRS agent reopen a tax debt which has been uncollectable due to statute of limitations has lapsed

I have a federal tax debt which expired in Feb this year due to 10 year statute passing. The agent colecting on more recent tax debt seized bank account for and got more money than I owed. He took the extra money and applied it to the expired tax debt and now says he is going to reopen that debt for new collections. Is this legal?

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1 Lawyer Answer
Eric  Day
Eric Day
  • Tax Law Lawyer
  • Henderson, NV

A: As most attorneys might say "It depends." It all depends on when the assessment on the tax account was made. For instance, if you owed money at the end of filing your return in 2012 and the government audits that return in 2014 and make additional assessments, then the statute runs from 2014, not 2012. Additionally, if the liability is large enough, the IRS can possibly get the Department of Justice to file in federal court and make you liable for the debt that you owe the IRS. If they were to do this (which you should know about because you would have been served) then the tax liability could be extended another 20 years because this has been resolved to a judgment at that point. Like I said, this is usually only done when the liability is great enough to make it worth the Department of Justice's time. If neither of these are the case, and you haven't committed fraud in any way, then they can no longer collect after the assessment date.

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