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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12689
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Is there a statute of limitations on paroll taxes. company

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is there a statute of limitations on paroll taxes . company went bankrupt in 2005
JA: The Accountant will know how to help. Please tell me more, so we can help you best.
Customer: company and shareholder went bankrupt in 2005 irs tried to collect from shareholder but there was just no money is there a statute of limitations
JA: Is there anything else the Accountant should be aware of?
Customer: I don't think so

Hi My name's Lane ... I can help you here.

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For payroll taxes, IRS only has a certain amount of time to collect. If the IRS doesn’t collect the balance within the statute, the rest is essentially written off, and any federal tax liens that have been filed for the balance are released.

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However, the general statutes can be extended when certain events take place during the collection period.

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The collection statute of limitations for unpaid federal payroll taxes is 10 years.

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Now, that clock starts ticking on the date your payroll tax return is filed, which is the date the tax is assessed (an important term). If you file a payroll tax return late, the statute also starts late

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If you never file, he statutory clock never starts ticking.

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IRS CAN file what's called a 6020(b) assessment, by arbitrarily making an assessment when they know of the existence of the company and it's operations but nothing has been filed

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And sometimes, many times, they're wrong.

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You can adjust 6020(b) assessments by filing your own payroll tax returns for the periods assessed by the IRS, but this restarts the collection statute to begin as of the date you file the original return.

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There can be other things that stop the clock; Collection activity on your account is suspended when you file an application for an offer in compromise (settlement) of your payroll taxes, and when you file an appeal on an IRS collection action or during a bankruptcy.

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They can't attempt to collect the tax from your company during any of these events. Instead, the IRS takes the time it is unable to collect from you and adds it on to the end of your statute. (This is called tolling the statute...essentially stopping the statutory clock).

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Finally, there's also a PERSONAL statutory perion (statute of limitations):

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In addition to the 10-year statutes the IRS has to collect payroll taxes, the IRS may also find officers of the company responsible for the trust fund portion of the delinquent payroll taxes. The trust fund portion of the tax includes the federal income tax and employee-portion of Social Security and Medicare tax that was withheld from employees.

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The personal assessment statute time is only three years after the date the payroll tax was assessed.

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If they don't perform the assessment within this period, IRS can never personally assess the officer with the trust fund balance for the delinquent tax for that period, although it can still seek collection from the company until the regular collection statute runs out.

Please let me know if you have any questions at all, before rating me.

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And if you DON'T have other questions Your positive rating … (by using those the stars or faces on your screen, and then clicking “submit”) …would be appreciated!

Otherwise I receive no compensation for the work.

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Thank you,

Lane

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I hold a law degree, with concentration in Tax Law, Estate law & Corporate law, a Master’s Degree, with specialization in financial accounting & tax, a BBA, and CFP & CRPS designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice, since 1986

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