writing up an offer in compromise statute of limitations

Offer In Compromise Statute Of Limitations

Behold, the numbing world of tax law which can effectively bore and confuse many small business owners from across the country. One of the most talked-about subjects is none other than an Offer in Compromise Statute of Limitations granted to the Internal Revenue Service. Too much is provided which leaves many to wonder about many things, only to find out that the information available is either bland or not touching upon their curiosity.

Until now. And you’ve got the finished results right here in front of you to use your advantage. Not only will you be able to get effective tips, but you’ll also get the answers to the most commonly asked questions by small business owners looking into this area of taxation.

  • In certain situations, this route can extend deadline for IRS collections.

Often misconstrued, and potentially hazardous. Many don’t realize that when these types of motions are filed, the Internal Revenue Service looks to make sure you cross your Ts and dot your Is during the whole process. And if you don’t, be prepared to let them benefit from your oversight, by replacing the time lost due to the process that was initiated on your behalf if it gets denied.

Quick Nugget of Info: The IRS has a total of 10 years that they’re able to collect taxes owed.

  • Offers in compromise are subject to investigation which could take several months.

Based upon previous experiences shared by those who went through the process, it can be timely. Expect an investigation to take 6-9 months, if not longer, to reach its conclusion. The IRS is going to do everything they have to do to ensure your outcome is the one that was fair as well as logical. So make sure you keep this in mind when doing any planning or anticipating any results from your efforts.

  • Be prepared if you win your battle with your proposed offer.

You will have 2 years to pay your agreed-upon amount that was outlined in the response to your filing most recently submitted. The time starts counting down the day of acceptance. Time is of the essence, so don’t let yourself take unnecessary chances.

  • Wrapping Up: Answering Frequently Asked Questions About Offers in Compromise

The best way to present the final countdown is to ensure that the most asked questions among business owners today get answered. Once and for all. So, here’s to ending the void of answers that have been awaited by many over the years.

  • After how many years can prevent the IRS from acting on unfiled returns?

They have 10 years, just like they do with taxes owed from previously filed tax returns. It’s a tax debt either way that you look at it. Even if it becomes more complex due to them uncovering the years that you forgot to file your return.

  • Is there a better term that one should choose over the others?

Consider one that has a 5-year probationary period where you stay current with all filings and tax payments. This will help ensure you have a higher chance of success. Not to mention, eliminate a lot of stress in the long run.

  • Can the IRS collect back taxes after 10 years?

No, this is the amount of time they must pursue all applicable avenues of collection. After 10 years, it becomes non-existent in the eyes of the law. If they don’t act on it in time, it becomes their loss and your gain when it comes to the upper advantage,

  • How does the 10-year statute of limitations affect liens?

If they don’t take it to court and pursue the necessary action to collect the amount of taxes owed before hitting 10 years, there’s nothing that can be done. The lien will be able to be removed provided you have proper guidance and/or representation.

  • What about state tax debt collections, is it the same?

This varies depending on each state due to the variety of tax laws that state agencies are known to put into effect and enforce. Make sure to consult the guidelines for your specific state to get the proper answer to this question since this is meant as a reference for federal taxation.

About the author

Seattle CPA+John Huddleston has written extensively on tax related subjects of interest to small business owners. He is a graduate of Washington State University and the University of Washington School of Law.