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35 Comments
Dec 5, 2013
Are you wondering if the IRS can still audit old taxes or still collect tax settlements? Maybe you want to know if you can still receive an old tax refund?
Whatever your tax situation may be, the IRS tax statute of limitations has a set time period for receiving your tax refund, to be audited by the IRS and a period of time that you can have tax liabilities collected. Regardless of the situation, if you still need to file previous year taxes, it’s best to start filing your taxes online now.
What is the Statue of Limitations?
The term “Statute of Limitations” doesn’t just apply to the latest episode of Law & Order. Yes, the term is commonly used inside the court, but it’s also used within the wonderful world of taxes.
The statute of limitations of taxes breaks into three parts.
- The period of time you have to collect a tax refund
- The period of time the IRS can audit your tax return
- The period of time the IRS can collect tax due
Three Years to Collect Your Tax Refund
The statute of limitations gives a three year period from the original deadline of the tax return for taxpayers to collect their tax refund. That means if you haven’t file your 2010 taxes yet, the deadline for collecting your 2010 tax refund is April 15, 2014. The deadline for tax refunds from 2009 and from prior year tax deadlines has passed. For example, the 2009 tax refunds deadline was April 15,2013.
The Exceptions of 3-Year Refund Statute of Limitations:
- If you have refunds from deductions for bad debt and worthless securities you are allowed up to seven years to claim a tax refund.
- If you have a mental or physical impairment and not able to manage financial matters, you are not included in the three-year statute of limitations deadline.
The IRS Has Up to Three Years To Audit Your Tax Return
The three year statute of limitations also applies to the amount of time the IRS has for auditing your tax return and possibly assessing additional tax liabilities. Beware that this is three years from the date you filed your tax return but measured from the tax deadline date (usually April 15th), if you filed your taxes before the tax deadline.
The Exceptions of 3-Year Statute of Limitations for Auditing your Tax Return:
- If you omitted income that adds up to more than 25% of income you reported on your income, then the IRS has six years from the date of file to audit your tax return and assess further taxes.
- The IRS also has six years to audit your tax return and assess further taxes if you have not included foreign financial assets.
- There is not a statute of limitations if you filed a false or fraudulent tax return. This means, if you lied and filed a false tax return, there is no limit to the period the IRS may audit you and assess further taxes.
The IRS Disregards Tax Liabilities After 10 Years
Yes, the IRS can only collect outstanding tax liabilities for up to 10 years from the day a tax liability has been finalized. This means the IRS can collect tax liabilities for 10 years of the full amount plus interest and penalties.
How a Tax Liability is finalized:
- The amount of tax reported on a tax return that you filed
- Or when an audit assessment for additional taxes or from a proposed assessment becomes finalized
The means, if the IRS didn’t collect the full amount of your tax liability in this 10-year period, it disappears forever!
The Exceptions of 10-Year Statute of Limitations for Tax Liabilities
The 10 years is suspended if;
- The IRS is reviewing an offer in compromise, innocent spouse relief, collection due processing hearing or installment agreement
- You are under the bankruptcy protection along with in additional six months
- You live outside of the US for six months or more
If you haven’t filed tax returns for past years, it’s in your best interest to do so as early as possible. That way you’ll be able to claim your refunds (if it’s within three years) and also, the statute of limitations of three years on audits and ten years on tax liability will begin.
If you realized you need to file your 2010 taxes in order to receive your refund before the 2014 deadline, or if you have other back taxes to file, you can get started online today with PriorTax.
Photo via Mikey Sklar on Flickr
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35 Responses to “What Are Tax Statute of Limitations? Refunds, Audits & Liabilities”
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Comments(35)
lea anne
Feb 3, 2014
i realized my husband has not filed his taxes since 2005 and although most years he was due a refund i am interested in finding out if we should still file from 2005-2010. i know we can file the 2010-2013 through yall. anything else i might need to know would be appreciated.
admin
Feb 3, 2014
Hi, he should definitely still file. Although, its good to know, he only has up to three years to collect his refund. That means, April 15, 2014 is the last day he can receive his 2010 tax refund.
He can create an account for each tax year he needs to file under the create an account page on our website.
Desalyn Jones
Feb 25, 2014
I just want to remind you of the exceptions.
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Does he fall under one of these rules?
Katherine
Apr 30, 2014
My husband had been making payment installments for prior tax years 2005- 2007. In additional to this we recently found out by accident that some other person was linked to the debt my husband had owed the IRS. It ended up being an identity theft situation, which we rectified by filling this information and providing proof to the iRS. As a result of this situation he received a letter in 02/ 2014 from the Irs stating my husband no longer owed the IRS, that he was actually owed a refund and that it would be sent out to him. We had waited and waited, but no check from the IRS? So he contacted them to verify the status,he was advised it had been turned over to the statute dept for further processing??
What can we expect in a situation like this? Please help?
Nancy
Apr 19, 2015
The statue of limitations talks about the 3 year period in which you are allowed to collect refund from IRS, IF THEY HAVE NOT BEEN FILED YET. What if they have been filed, but just realized that the gain showed was overstated?
admin
May 11, 2015
Hi Nancy,
Not to worry; this happens more than you would think. You can file an amended return within three years of the date that you originally filed or within two years of the date that you paid the tax due amount, whichever is later.
Yolanda
Jul 13, 2015
My husband was notified by the IRS he owed taxes he did not file for in 2004 and 2007. My question is “are they to old and need to be removed.” Maybe the 2004?
admin
Jul 17, 2015
Hi Yolanda,
You should file your prior year tax returns as soon as possible. Unfortunately, un-filed tax returns can negatively impact current and future tax years. The IRS can withhold a future refund to cover past tax years that you didn’t file or pay a tax amount due on. You won’t receive a refund anymore since there is a 3-year time frame to do so but it is still in your best interest to file both. You can create a Priortax account and prepare your 2007 tax return. We offer free customer service support via phone, livechat and email so our tax professionals will be able to answer any other questions you may have throughout the entire process.
Robert
Feb 16, 2016
If the statue of limitations has expired, can you start getting refunds on your new yearly tax returns?
admin
Feb 16, 2016
Hi Robert,
After the 10 year statute of limitations, the IRS will update your balance to zero. Once this is updated, they will not be able to collect your past balance on any future tax return refunds issued.
Kandi Cope
Mar 1, 2017
How long does the IRS have to send you a letter about a review or audit..I filed on 2/1/2017 and got a Audit code but as of yet received a letter of what they need.
admin
Apr 3, 2017
I advise you contact the IRS directly for more information regarding the status of your pending audit letter.
Jeff Gandolfo
Mar 9, 2017
I filed 3 yrs of returns in 2006, 2003, 2004, 2005. I actually had an IRS office employee prepare and file them. I received requests for more documentation which I provided.This occurred on several occasions and I complied. I waited patiently for a long time for my refunds to arrive, unfortunately they never did. I made contact and was told it wasn’t resolved but closed due to a timeline to respond had expired. I had obviously responded in a timely manner and was beyond livid. My question is, do I have any recourse to have this issue revisited or re-opened? Refunds totalled roughly 15,000 dollars.
admin
Mar 30, 2017
The statute of limitations for claiming a refund is 3 years. Although you were expecting $15000 back, once the period of time specified in a statute of limitations passes, you would forfeit your refund.
abrir pagina Web
May 1, 2017
Estaba buscando esa informacion hace años, te lo
agradezco, estoy de contrato con tu punto de vista y heno igual.
Despues de buscar mucho por Internet encontre
lo que buscaba. Genial!!! muchas muchas gracias
admin
May 11, 2017
Hola Abrir,
Estamos encantados de aclarar y responder a sus preguntas.
Lori
Jul 7, 2017
Just received a letter in the mail saying my husband & I have delinquent returns from 2007 & we owe $14,391.00. We have never not filed taxes. This was 10 years ago. Am I required to dig up this old tax returns to prove we filed. Can never get through when I try to call. Sounds like a big scam to me. How do I deal with this?
admin
Jul 13, 2017
I recommend you contact an IRS agent to determine the authenticity of the letter. Once confirmed, the IRS will advise you on what steps are needed to resolve the issue.
Omar
Jul 15, 2017
I owed $7000 to the IRS and that started in July 2006 ,my question is when will it reach the statute of limitations
admin
Jul 18, 2017
There is a statute of limitations of 10 years for IRS collection of back taxes owed.
PJ
Aug 11, 2017
my 2012 taxes did not get filed until DEC 30, 2016 by my accountant.
We were due a sizable refund. I called IRS as we never received any type of notification, just NO refund.
I was told due to the 3yr Statue of Limitations which I knew nothing about we will not see our money. Now reading up on this I understand.
My acct who is extremely reputable had filed extensions and sent in by Dec 30,2016 instead of April.
She has now said she made a mistake and will send a letter requesting a hearing and that she will most likely be charged a penalty and we will eventually get our money back……….but that it will take a long time!!
After researching statue of limitations online I am concerned we will never see our money.
Is it worth the fight???
admin
Aug 11, 2017
The IRS is very stringent on this limitation. However, it never hurts to try.
Omar
Aug 30, 2017
Why my 2006 tax won’t expire.i never file bankruptcy,or offer compromise so can you explain me please.my tax assessment was on December 2006
Tyrone Barnes
Oct 24, 2017
I filed my 2013 taxes in Feb of 2017. I forgot to add my dependent to my return. Can I still claim my refund? I mailed an amended return today.
admin
Oct 25, 2017
For amended returns, the IRS publication states that you have 3 years after the date you filed your original return for a claim of a refund. However, waiting for the IRS to correspond with you would be for the best.
George Taylor
Dec 27, 2017
I just found out that my ex wife and I owe taxes from 2006. I was not aware, as her ss# is listed first on that tax return. It is past the 10 year window…..do I still owe these taxes? Can the IRS still collect them?
George Taylor
Dec 27, 2017
The reason I ask is that I am setting up a payment plan for another more recent year, and they are telling me that I have to include 2006 also in order to set up the payment plan. Thank you for your help!
admin
Dec 28, 2017
If your tax liability with the IRS is at least 10 years old, you might think that the agency doesn’t have the ability to pursue you for collection. While most taxpayers receive a reprieve on their tax debt after 10 years, the IRS may still have the ability to collect on an old debt.
Jenny
Feb 7, 2018
I’m scared to call the IRS to ask…. we didn’t file taxes for 2004, 2005 or 2006. They sent us letter telling us they calculated it for us. In 2007/08 we filed all three hoping to get the balance down. It didn’t help much. We did a payment plan in 08 that lasted 1 month, other then that we’ve done nothing with it. The letters stopped coming years ago. Do we still owe this debt?
admin
Apr 2, 2018
Jenny,
The IRS collects outstanding tax liabilities for up to 10 years from the day a tax liability has been finalized. This means the IRS can collect tax liabilities for 10 years of the full amount plus interest and penalties.
Ashley
Apr 6, 2018
2016 taxes were filed and sent in on time, we were due to get a refund, we did not owe any back taxes. We never received our tax return or any kind of letter from the irs what does this mean. They did send us a letter saying we will receive 90$ paid to us for interest
May Robinson
Apr 8, 2018
I have not worked in 11 years. My husband filed 2017 taxes this year . He filed me with him. All of a sudden the IRS took his refund. They say because I owe them $3,000 from 2006. I never heard any thing about this until he filed and included me. How can I dispute this decision. I don’t have any paperwork from 2006 . The only thing I have is the letter dated April 2 , 2018. What can I do ?
Kdog
Apr 28, 2018
I filed my tax return back in 2008 for 2007.. got a letter stating I was paid $800 too much 7 mo this later and got a few letters but never filed after that when I know I was owed money every year. I’ve peobanly forfeighted $20k in taxes from being employed through the years. I thought they filed the for you after a while and held the money… at this point I figured I’d have paid my debt and be owed a chunk of change. Well I’m ready to file my taxes this year and have done so, but after reading through this forum, I’m being told it works completely different. My tax returns were submitted and accepted and seem to be in order at the moment…. question is , what should be my concerns ? Who can I call ? Who can I reach out to for help ?
Jacqueline Cummings
Nov 18, 2018
I just received a demand for payment of AZ state tax for the year 2006 they claim I owe $800 I don’t have any proof that I did or did not pay any or all, that far back. What recourse do I have they are threatening to withhold any future refunds and use other means to collect the alleged debt
ERNEST PRICE
May 12, 2022
Are IRS statute of limitation was 10 years tax 2005 that 17years ago they are still taking funds from my benefits when do this stop I have paid these taxes over and they just taken all my taxes for the past year