Check out the following new Questions for the Tax Lady answers and feel free to ask me questions through one of the links below. You can send me an email, direct message or @ reply, and I will do my best to get an answer for you!
Question: I have a tax debt stemming from 1997, and a failed Offer in Compromise attempt from 2005. Will attempting to resolve my tax problems extend the IRS' 10 year statute of limitations on the original tax debt?
Answer: Good question. The first thing you should do is check when the statute of limitation or CSED deadline is. Most tax debts will expire 10 years from the date of assessment, so you might be entirely off the hook. However, it is very important for you to find out how much time was tacked on to the liability during the Offer in Compromise process.
When your previous attempt at getting an Offer in Compromise was pending, the statute of limitations clock stopped running. So, if the IRS was reviewing your offer for 6 months, your statute of limitations would be extended by 6 months.
If your debt still hasn’t expired, then you should look at how to resolve your debts. Installment agreements and being placed on Currently Not Collectible status generally will have no affect on the statute of limitations.
Question: I got a letter from the IRS notifying me that I was selected for an examination. If I ignore the notification will the IRS keep trying to contact me? Is it possible they might forget about my account?
Answer: The worst thing you can do with any notice from the IRS is ignore it. Once you get notice that you are being examined (that means you’re being audited, by the way) the IRS will NOT forget about you. They will send a few more letters, then they will start calling and it only gets worse from there. Ignoring the notice could lead to some pretty nasty consequences, like the auditor hunting you down at your job when you fail to respond.
Your best bet is to read the notice, call your tax professional and follow the directions in the notice. Be especially mindful of any due dates; if the notice states they need to see your documentation by December 22, they are not kidding. Many examinations are pretty simple. If you get proactive and tackle the issue head on, you have a better chance of nipping this problem in the bud.