Surveys indicate that a majority of Americans are worried about filing their taxes incorrectly. The big bad taxman has a lot of power, and people recognize that mistakes at tax time could come back around to haunt them.
The biggest issues come when people fail to pay their tax debt. In some instances, you might mistakenly fail to pay and wind up with documents that you’re not quite sure about.
We’re going to discuss one of those documents today. Namely, we’ll look at the idea of an IRS tax lien and examine whether or not it has a statute of limitations.
Hopefully, the ideas below will help you address a current issue with tax repayment or avoid one in the future. Let’s get started.
What Is A Tax Lien, Anyway?
A tax lien is a move that the IRS makes to try and get the debts that it’s owed. A lien puts claims on your assets, requiring that the government gets what it’s owed in the case that you sell that property.
For example, let’s say that you have a fancy boat worth $80,000. You owe the government $20,000 in tax debt. The government gets that $20,000 when you sell your boat, and you get the remainder.
The same goes for houses, land, and other valuable assets. The important thing to remember here is that a lien doesn’t mean that the IRS is going to take those items from you.
They just get their fair share when you sell.
If you don’t follow the arrangement of your lien, though, the IRS might file a tax levy. The levy is an indication that the government is going to seize your property.
Is There A Statute of Limitations For A Federal Tax Lien?
There’s a ten-year statute of limitations for the IRS to collect money from you. That’s not always a workable number, though, as there are different considerations that could pause or extend that timeframe.
For example, if you do anything to adjust that tax debt, the IRS stalls the timeframe for that statute of limitation. For example, you might file for bankruptcy and a court official could put a stay on your financial situation.
While that stay is in place, the statute of limitation timeline pauses, effectively adding the duration of the stay to the statute of limitations.
As your ten-year statute approaches, the government needs to file for an extension. They have to do so at least thirty days before your statute of limitations ends. If they fail to do that, you age out of the statute of limitations.
It’s an issue that requires your attention, though, because there are various hoops and loopholes that could affect the lien or the statute.
Looking To Address Your Tax Debt?
If you’ve got tax debts or DOR collections that you’re looking to settle, you might need a little help. There’s a lot to learn about different situations with the IRS. We’re here to help.
Explore our site for ways to finish your taxes, settle your debts, and get a clear idea of your financial situation.
