What Is The IRS Statute of Limitations On Back Taxes

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What Is The IRS Statute of Limitations On Back Taxes

The IRS expects you to file and pay your taxes on time each year. When you fail to submit a tax return, you put yourself at risk for IRS enforced collections leading to serious financial hardships for you and your family.

I have not filed in many years and have never been contacted – I Can’t Be Touched, Right?

Many people believe that the IRS cannot touch you after a certain number of years have passed since you last filed your tax return. It’s true to some degree, but it’s not as simple as you might think and the IRS can start and stop the clock for a variety of reasons.

The IRS Statute of Limitations On Back Taxes for Unfiled Taxes

How the IRS determines when the statute of limitations starts and stops is highly misunderstood. Many folks believe that the IRS cannot take action against them if 10 years have passed since they last filed a tax return.

It is true that the IRS can only collect on tax liabilities that are 10 years or younger. However, that 10 years does not begin when you neglect, either accidentally or willfully, to file your return. 

Instead, the clock for the 10 year statute of limitations begins only when you file a return or file to get caught up with your back taxes, or the IRS files and submits a substitute return on your behalf.  When any of these events happen, THAT is when the statute of  limitations’ clock starts. So if you have not filed a return in years, the statute of limitations clock on those returns has likely not even started. 

And the IRS frequently files Substitute for Returns for unfiled taxpayers. You’re likely not going to get away with not filing when you owe and hoping they don’t notice. The IRS will file a return on your behalf for a tax year five years ago, give you no credits or deductions, and assess you with back taxes and penalties for that tax year. The Statute of Limitations would start when the tax is assessed after the tax return filing. 

Now if you filed a tax return ten years ago and you owed taxes then, it is very possible those taxes will no longer be collectable under the statute of limitations.

If The IRS Forces Me to File Past Returns, and I am Due a Refund, They will Owe Me Money for Each of Those Years!

There are times when taxpayers don’t file because the IRS owed them a little bit of money and they didn’t want to bother with it. 

Unfortunately, the IRS will only allow you to collect on tax refunds owed to you within the last three years. If you are owed a refund from four years ago or later, you forfeit the rights to that money. That money becomes property of the United States Treasury. 

Finally, you may want to file your missing tax returns so you are properly credited for those tax years. Missing returns result in you not being credited as having paid into the tax system for those years. You could shortchange yourself when you want to collect on Social Security and Medicare benefits later after you retire. 

If you didn’t file tax returns for past years, you want to file and submit your missing returns as soon as possible. The IRS very well may be gearing up to file a Substitute for Return on your behalf which doesn’ include credits and deductions that you’re entitled to. Or you may be entitled to a refund for returns not filed within the last three years.

Details about IRS Statute of Limitations

The statute of limitations for the IRS to collect on back taxes begins when THEY notice that you have missing returns or when you decide to file and submit those returns yourself. 

Here Are Other Common Situations When The Statute of Limitations is Pushed Back (Tolled)

  • IF you file an appeal on your back taxes.
  • IF you file an Offer in Compromise or OIC.
  • IF you sign a waiver.
  • IF you file for bankruptcy.
  • IF the IRS files substitute tax returns on your behalf.

Any of the above circumstances begins a NEW 10-year statute of limitations push back the 10 year statute of limitations so that the statute of limitations will end up being longer than 10 years. For instance, if you file an Offer in Compromise, it may take 8 months to get an answer. The statute of limitations is then pushed back for as long as the Offer in Compromise is being reviewed – if it’s 8 months, then statute gets pushed out 8 months on top of the 10 years.


Don’t try to fool the IRS by not filing your tax returns. I’ve said it before, the IRS is the most powerful collection agency on the planet. They WILL file a Substitute for Return for the years you did not file. The returns they file will not give you credits and deductions, and you’ll have extra penalties and interest to deal with, along with a new 10 year statute of limitations. Your best bet is to get unfiled returns filed quickly and then figure out a way to pay back the IRS. 

The W Tax Group has licensed attorneys and in-house accountants with years of experience who know exactly what they’re doing when filing tax returns for prior years or preparing tax returns in response to IRS letters threatening to file a Substitute for Return.

If you need tax assistance or have IRS statute of limitations questions, contact our team at The W Tax Group and we can help – We offer a 100% free tax case review so you can learn your options without any financial commitment.

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