Statute of Limitations on Assessment for Personal Income Taxes
This guide informs readers about the statute of limitations and the different exceptions regarding Assessment for personal income taxes.
Assessment and Three Years Statute of LimitationsAn Official IRS assessment creates a balance due for a taxpayer. Generally, the IRS has three years to make an assessment. After the three years, the IRS will be barred by the statute of limitations. The statute of limitations begins to run on the due date for the tax return (i.e. April 15). If the return is filed after the due date, the statute of limitations begins to run from the date of the filing.
ExceptionsA. If a return is not filed then the statute of limitations on assessment will not apply and the tax may be assessed at any time.
B. False Return: A false or fraudulent return with the intent to evade tax, the tax may be assessed, or a proceeding in court for collection of such tax may be begun without assessment, at any time.
C. Willful Attempt to Evade Tax: A willful attempt in any manner to defeat or evade tax, the tax may be assessed, or a proceeding in court for collection of such tax may be begun without assessment, at any time.
D. Where a taxpayer omits 25 percent of their gross income the statute of limitations is extended to 6 years.
Collection of Assessed TaxAs stated above the IRS has three years to assess a tax liability. Once the tax liability has been assessed, the IRS has ten years to collect the taxes. If the taxes are not collected in that period, the statute of limitations will bar the IRS from collecting.
NOTE: The IRS has a right to sue in the U.S. District Court on a tax assessment and can obtain a judgment against the taxpayer that could add 20 to 25 years to the statute of limitations.