The IRS Audit Blog

Posts Tagged ‘laws’

Question: Can anyone tell me the correct Title and Section of the US Code?

Here is an excerpt from an article from Apple.com on the statute of limitations for the IRS’ collection of back taxes:

The IRS has 10 years to collect outstanding tax liabilities. This is measured from the day a tax liability has been finalized. A tax liability can be finalized in a number of ways. It could be a balance due on a tax return, an assessment from an audit, or a proposed assessment that has become final. From that day, the IRS has ten years to collect the full amount, plus any penalties and interest. If the IRS doesn’t collect the full amount in the 10-year period, then the remaining balance on the account disappears forever. The statute of limitations on collecting the tax has expired.

What is the statute number?

Answer: 26 USC 6501(a) gives three years from the date a return was filed for the IRS to collect a balance due. However, once the IRS actually makes an assessment of taxes (generally about 6 to 8 months after the return is filed), 26 USC 6502(a) gives ten years from the date of the assessment for the IRS to collect the taxes.

For more specific information on your tax problem, contact a tax attorney in your state. For a referral, contact your local or state bar association.

John Bullis: What is the ‘statute of limitations?’

A part of the tax law is the “statute of limitations.” That is the limit of how long a tax return is open for audit by IRS or for amendment by the taxpayer.

Audit Preparation – Statute of Limitations for Audits

Question: When will I get tax refund back for 2010, since they changed the law this year I had to mail it in?

In January the IRS made everyone that was declaring the new homebuyers $8000 tax credit mail their returns in, no e-file was allowed. So I mailed it on February 16th, certified mail and they received it on February 19th, (according to USPS). So it’s been 2 1/2 weeks and the IRS website “where’s my refund” is saying they still have not logged it in and could take up to 6 weeks?! I chose the option for direct deposit knowing that would help speed it up. If anyone can comment on timing?

Answer: I mailed my return on Feb. 5th. According to USPS it was delivered on Feb. 13th. The WMR website is still telling me that exact same thing. It has been 3 1/2 weeks of waiting for us. I guess we are in for another 2-6 weeks of waiting. On Where’s My Refund this morning(March 10th) it finally says ” We have received your tax return and it is being processed. Unless we find mistakes or you owe more taxes you should receive your refund by April 13.

HuffPost College Freshman 8 Sleep Contest Rules

What’s Your Reaction? The 2010 HuffPost College Sleep Challenge (the “Contest”) is only open to contestants who are U.S. residents above 18 years old by June 22, 2010 and currently enrolled as a freshman in a US college or university. Void outside the 50 United States and the District of Columbia.

2010, 2011 IRS Federal Capital Gains Tax Law Information

Question: The Specter Of An IRS Audit?

If a woman inadvertently mischaracterized a 401k withdrawal on her 2004 return as a rollover (rather than its actual use — home purchase), and the amount ($20k) was more than 25% of her income:

1. What are the chances the error will be detected if it has not been detected thus far?

2. Is the statute of limitations 6 years from the date the 2004 return was filed?

3. At this point, is there a legal duty to correct the innocent mistake?

Merci.

Answer: 1. The IRS has a habit of waiting until the last minute–just before the limitations period for assessment expires–before opening an audit. But in your case, the initial statute of limitations has passed (see below). So I don’t think it’s likely you would get a letter now.

2. The statute of limitations is three years from the date the return is filed or April 15, whichever is later. HOWEVER, there is a 6-year statute of limitations on assessment of amounts at least 20% of the taxable income on the return. The amount–25% of the income–may not be more than 20% of the TAX she had to report. So it’s impossible to tell without having more detail whether the 3-year period or the 6-year period would apply.

There is NO statute of limitations on fraud. But if she (you) didn’t know of the error at the time you filed the return, then there was no fraud.

3. There is no legal duty to correct an innocent mistake. But the question is, Is it worth the risk of not correcting the mistake, considering all the penalties and interest that come along with it? At this point–after the 3 years is up, but before the 6 years is up–you alreaday would have accrued a lot of interest and penalties, so not too much of a risk.

Retain important records and cut the clutter

As you gather the papers necessary for this year’s tax return preparation, you may be wondering what records you need…

Offer in Compromise | IRS Tax Debt Relief

Keep important records and cut the clutter

As you gather the papers necessary for this year’s tax return preparation, you may be wondering what records you need to keep and how long you need to keep them.

IRS Collection Statute Expiration Date (CSED)

2010: Get your financial house in order

Author David Bach shares tips on how to get 2010 off to a good start.

Home Office Deduction