Statute of Limitations

Tax law is a dangerous trap for the unwary. The Internal Revenue Code (Tax Code) and the IRS Regulations provide numerous statute of limitations periods which require the IRS or taxpayers to take certain actions within certain time periods. Ignorance of these statutory or regulatory deadlines frequently leads to missed opportunities which could have saved taxpayers thousands and sometimes millions of dollars.

For example, Sections 6501 and 6502 of the Tax Code set out the statute of limitations periods for assessment and collection of taxes. As a general rule, the IRS has three years to make an assessment from the date the tax return was filed. There are certain exceptions to this general rule. For instance, under Section 6501(c)(1) of the Tax Code, if the tax return was “false or fraudulent”, the statute of limitations runs indefinitely. That is, in the case of false or fraudulent returns, nothing prevents the IRS from assessing taxes many years after the tax year in question. The same rule applies if no tax returns were filed [Section 6501(c)(3)]. Time for assessment can be extended by agreement between the taxpayer and the IRS. Within 60 days after making an assessment, the IRS should send a “notice and demand” to the taxpayer. After making an assessment and subject to certain exceptions, the IRS has 10 years to collect the tax.

Another statute of limitations period relates to taxpayer’s opportunity to demand a Collection Due Process Hearing or CDP Hearing. Under Section 6330(a) of the Tax Code a taxpayer who receives a Notice of Lien or Levy has 30 days to request a Collection Due Process Hearing (CDP Hearing).

Yet another statutory time limit is provided by Section 6213 of the Tax Code which requires the taxpayer to initiate a U.S. Tax Court law suit within 90 days after the Notice of Deficiency was issued to the taxpayer by the IRS.

If you need assistance understanding the particular statute of limitations period applicable to your case, contact Kamyar Mehdiyoun, IRS and tax litigation attorney in Rockville, Maryland. We are a tax law firm specializing in tax controversy and tax litigation. Ignorance of statute of limitations periods provided by the Tax Code means missed opportunities which may result in irreversible losses in tax savings.