Recently, our firm had a conversation with the collection division of the IRS about the statute of limitations on a client’s account. We believed that over $60,000 of back taxes should have expired, which would have meant that the IRS could no longer collect on the debt and would’ve been forced to erase it entirely. We went back and forth over the phone discussing our position, but we could not get the agent to bend on his calculations. So, we escalated the situation and entered the dispute for further review.
After speaking with some of our respected peers at other agencies, we realize that many of us share a common opinion: The IRS is frequently incorrect, and their computer systems are dated and inferior. When it comes to calculating Collection Statute Expiration Dates (CSED), Refund Statutes Expiration Dates (RSED), and Assessment Statutes Expiration Dates (ASED), the IRS is simply wrong far too often — roughly around 40% of the time according to my best estimate and those of my colleagues.
The consequence of this is that taking the IRS at their word could potentially cost individual taxpayers tens of thousands of dollars. Conversely, working with a skilled tax attorney who is familiar with tolling events (events that can extend the 10-year statute of limitations, such as an Offer in Compromise or bankruptcy filing) and the Internal Revenue Manual (IRM) could save you thousands in unnecessary and/or inaccurate tax debts and payments. The average CPA or attorney doesn’t have this same knowledge, so it’s important to hire an experienced tax attorney when dealing with major tax liabilities.
Many individuals shop around to find the cheapest price, but these initial savings could end up costing you significantly in the end, so choose carefully. Find an attorney who specializes in state and federal taxes — someone who deals with tax-related matters all day, every day. Above all, don’t short change your own financial future by going with an inexperienced (and therefore cheaper) option just to save a few bucks in the short term.
Oh, and after the IRS reviewed our stance on the statute of limitations dispute mentioned above, it was determined that we were, in fact, correct. The result: the balances on four previous tax years were deemed expired! Our precise calculations, thorough understanding of tolling, and superior technology, saved our client over $60,000. I believe the IRS dropped the ball on this particular issue, and the substantial dollar amount slipped through the cracks as a result. This was a major win for our client, and we were overjoyed to be able to help another satisfied taxpayer resolve their tax liability.
Congress has mandated that the IRS must adhere to strict timelines when it comes to examining, assessing, refunding, crediting, and collecting taxes. Without these statutes, the IRS would have unlimited time to react to a tax dispute. Because of the specific details of these restrictions, it is very important that taxpayers know how to play them game. If they don’t, then they must hire a tax resolution attorney who knows the calculations and will fight to protect your interests and your rights.
As for our aforementioned client, they made a great choice by choosing our firm and following our advice to eliminate previous back taxes and cut their overall tax bill in half. If you’re facing a similar tax liability, please call us at (410) 793-1231 or complete the brief form on this page. We would love the chance to speak with you about your options and develop a preliminary plan to help you to the best of our ability.
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