Late last month, a group of United States Senators submitted a letter to Pioneer Tax Recovery, one of four debt collection organizations contracted by the Internal Revenue Service (IRS), accusing the organization of violating the U.S. tax code.
In the letter, lawmakers objected to Pioneer’s “extraordinarily dangerous” practices that encouraged debtors to use 401(k) funds, credit cards and home loans to pay off overdue taxes – some totaling as much as $50,000.
Lawmakers also cited Pioneer’s employment practices, specifically encouraging employees to suggest that tax debtors liquidate assets or borrow money to cover overdue taxes. In scripts submitted to the IRS for approval, Pioneer employees were directed to provide taxpayers ideas on where and how to borrow.
The letter also accused all four of the collection organizations employed by the IRS of offering debtors installment plans that spanned as much as seven years – two years longer than private collectors are allowed to offer under existing law. Under current U.S. tax code, private collectors may not offer installment agreements for a period longer than five years.
How Long Can the IRS Attempt to Collect Unpaid Taxes?
When you are in debt to the IRS, you are not on the hook forever. There is generally a 10-year statute of limitations on all IRS collections, meaning that the IRS can try to collect any unpaid taxes up to 10 years from the date of assessment. After those 10 years are up, barring some important exceptions, the IRS must cease its collection efforts.
However, it’s important to note that, as your Collection Statute Expiration Date nears, the IRS and its collectors may be more aggressive in their pursuit to recover as much of your debt as possible.
Can the Limitations Period Be Extended?
In some cases, the 10-year collection period may wind up lasting longer than 10 years because it is possible to suspend it for a period of time. When a statute of limitations is suspended, it does not count towards that 10-year deadline and the IRS is legally barred from making any attempt to collect.
Some taxpayers may also elect to enter into an installment agreement that allows for partial payment of the debt amount owed to the IRS. In order for this to happen an individual generally has to sign a form that waives the 10-year limitations period. However, this extension may last no longer than six years.
Once the limitations period is nearing its end on an extension, the IRS may offer attractive terms in order to persuade you to agree to to another extension of the deadline.
However it’s important not to act on this without first consulting with a qualified attorney, as it may be better to let the IRS recover whatever debt it can before the limit expires.
Attorneys Specializing in IRS Issues
If you have received a notice from the IRS, it is in your best interest to contact an attorney as soon as possible. For those residing in the communities around Dallas and Tyler, Texas, the legal team at Scammahorn Law Firm is available to help with IRS-related legal issues, including the attempted recovery of outstanding tax debt.
Our attorneys can carefully assess your case and help you determine the best course of legal action. To receive more information on our services, or to schedule an initial consultation with our legal team, contact the Scammahorn Law Firm today at (903) 595-1000.