IRS and the Statute of Limitation

The subject of article one is the Statute of Limitation, a government rule that forces the Internal Revenue Service and other state taxing agencies to put a limit on the time they
can collect money you owe them or do an audit on your tax returns or tax obligations.
Once you file your income tax returns, the Internal Revenue Service has a 10 year limit on
collecting any money you owe them providing you committed no fraud, withheld
information or falsified your documents in any way.

For assessments of tax or levy made after November 5, 1990, the IRS cannot either collect or levy any tax 10 (ten) years after the date of assessment of tax or levy. See Section 6502(a)(1) of the Internal Revenue Code and section 301.6502-1 of the income tax regulations. Court proceedings must also begin within the 10 year period of limitations. Section 301.6502-1(a)(1) of the regulations.

Another benefit of the Statute of Limitation is that once you filed your taxes, the Internal Revenue Service has a three year window to possibly do an audit against you. That means that once time period has expired you can put those files behind you providing you were honest in preparing your income tax return and reported all the income you received those years.

General Rule

The IRS is required to assess tax within 3 (three) years after the return was filed. See section 6501(a) of the Code and section 301.6501(a)-1(a) of the regulations. Similarly, no proceeding in court without assessment for the collection of any tax can begin after the expiration of 3 years. See section 301.6501(a)-1(b) of the regulations.

While many people fear the Internal Revenue Service and give them almost god like
powers, in reality they are a group of ordinary people like you and me who are just
doing a job.

The truth about IRS and other income tax employees is they are workers who must
follow a set of guidelines in a book of tax laws with no power to make decisions.
And the good thing about the rules and regulations in the income tax books is they
are available to us as citizens, meaning we have a right to examine them and use them
as our defense when we challenge an IRS decision.

So when it comes to filing your taxes, the sooner the better because the Statute of Limitation is on your friend with more benefits than you can imagine.