It's always been my understanding that the lien can be extended only if you waive the SOL. My friend did no such thing. She met with a CPA who told her to just keep paying the monthly amount and the debt will evaporate after 10 years. The part about not filing yearly does not apply here. In the mid-90s, the wife got canned after 15 years and the company gave her a check for the balance of her retirement fund, $21k. Her husband was unemployed so they had no choice but to live off that money until one of them got a job. They both got jobs but making half of what they had earned previously so they were unable to pay the taxes due on the $24k. They have always filed Married Filing Separately as this is the wife's debt alone. She has filed and paid her taxes every year before and after this one bad year and never had any problems with the IRS. On a few occasions, she was due a refund and got the letter saying they were applying her refund to outstanding taxes. She made a payment agreement immediately after filing the large sum owed return and made those payments perfectly. The IRS would send her a monthly bill and she paid it on time every time. Then, after six years of monthly payments, the montly bills stopped coming. She continued paying it and saving all the cancelled checks. She received a letter in the mail about a year ago from the IRS in which the IRS declared the debt uncollectable and asking her to please continue to make a good faith payment per month of $50. which she does religiously. My question to you is how can they extend the lien before it self releases? Does the taxpayer have to sign it or agree to it. That sounds like a stupid question as this is the government we are talking about but I truly have never heard of this. She is making reasonable money now (35k), however, her husband is something of a moocher IMO who makes very little money (11k?). She carries nearly all the load in the household and is afraid if they seize her wages, they will lose the house. I appreciate any thoughts you have on this situation that I can relay to her. She's getting pretty nervous about it.
shirley, tell your friend to go to a TAX CPA...a CPA that is an EA (enrolled agent). This kind of cpa has the expertise to give your friend advice re:taxes. If she is making installment pmts why didn't the irs release her lien? there are a many unanswered questions here...the irs code is complicated...if you ever saw the entire code books you would faint! if your friend is paaying $50 and the irs is not bothering her...then I doubt if they are going to come after her wages...plus they have to give her notice..30 days...if they do and in those 30 days there are alot of things she could do to stop them. If she waits the 10 years...and the irs doesn't extend the lien...the lien might go away...it doesn't mean the taxes go away...but their most powerful tool of collections...which is the lien then the levy does. My advice to your friend would be to seek advice...it might cost her some $$$ but in the end it might save her alot more. clc
The CPA she spoke to was through a company that is made up of former IRS agents. She has been told by that CPA that the taxes DO go away after 10 years. They cannot collect once the SOL runs out. And they cannot extend the date on the lien without the taxpayer signing away that right. I will ask her to verify this again, but I just got off the telephone with her and she is positive that that is what she was told. And THANK YOU for your helpful posts.
shirley, this is what I will do...I will go back and research that question for you. Off the top of my head and in the research I already have..the irs can extend the lien by refiling b4 the 10 yr self releasing date...they do not need a taxpayer signature to do that...but when I do my research I will give you the urls so you can print it out for her. if you email me @sealeighsea@hotmail.com we can continue this without posting here. clc
Shirley, I found this on a tax preparer professional site =================================== You're right, this is a sometimes overlooked point. In many cases, perhaps before checking for dischargeability the statute should be checked, instead. I would like to add a few embellishments, if I may. It's important to check the 10-year statute as to subsequent assessments, not just the original assessment. This might happen if there was an audit, etc. Also, there are several things that toll the running of the ten year period. You mentioned offers-in-compromise. But add to that list, time in a prior bankruptcy plus six months, an agreement by the taxpayer, a taxpayer's assistance order, and a tax court proceeding may also toll the time. See IRC §7811, 6503(i)(2), 6503(a). =================================== Now what I don't know is...the $50 a month your friend is sending...is this considered an agreement? when I get time I will print the mentioned codes and study them...if I can't figure it out I will be seeing my tax atty on friday and I will ask him. hope this helps. clc
shirley- I found the best explanation yet for your friend...my eyes are crossed and blurry...and I'm going to bed! hope this helps answer all the questions clc ===================================== As to your question about the tax liens, a little explanation about the lien might help. The IRS gets an automatic lien on every asset you have starting on the date that the taxes are assessed. That lien lasts only as long as (1) the taxes remain unsatisfied and (2) the statutory period for collection has not expired. The collection statute is 10 years (unless extended) and the ten years starts on the date of assessment. The notice of lien that the IRS files is needed for the IRS lien to get priority over certain types of claims and debts that the taxpayer may have against him. It has nothing to do with making the actual lien itself valid. The key here is that the lien dies when the collection statute runs out. Thus, the IRS can't keep it alive simply by filing new notices of lien. If the IRS wants to keep a lien past the statute of limitations (SOL) period, it can file a suit to reduce the claim to judgment. This is different from extending the SOL itself. If the IRS obtains a judgment, the judgement lien lasts (as I recall) for 20 years. So, even though the tax lien has expired, the judgement lien would still protect the IRS. The rights the IRS has under the judgement are a little different than under the tax lien though. It's important to note that the IRS does not often sue to reduce tax debts to a judgment. The time and expense of the suit are often not worthwhile. If the IRS does sue for judgement, you will get served with a copy of the complaint, so it won't be a surprise. As long as the installment agreement remains in place, I doubt very much that the IRS will take this step. One of the ways the SOL can get extended If you signed a waiver. Depending upon the circumstances surrounding the approval of your installment agreement, you may have been asked to sign a waiver to extend the SOL since your installment agreement would not pay off the debt within the SOL period. This is usually done on Form 900, which is separate from the installment agreement form. You would get a copy of the approved Form 900 from the IRS. The IRS has considered updating the installment agreement forms to include the waiver directly on those forms. I haven't seen the most recent installment agreement forms, so I don't know if they have done that yet. Read your installment agreement carefully to see if it is in there. If not, see if you have a copy of Form 900 (it's about the size of a 4 inch x 5 inch index card). You can find out what the statute of limitations period is by asking the IRS, too. But make sure you ask somebody who actually knows how the SOL is computed to get an accurate answer. A tax professional familiar with IRS transcripts can probably compute it for you, too. =====================================
