Sunday, August 21, 2011

The 10 year statute of limitation for collection after assessment may be extended by an offer in compromise

The United States District Court in Nevada case of U.S. v. Booher, 108 AFTR 2d 2011-5113 highlights the fact that the IRS may pursue collection against a taxpayer even though it began after the 10-year time period generally allowed by law.  The general rule under Section 6502 of the Internal Revenue Code requires the IRS to begin a civil action to collect federal tax within 10 years after assessment or such assessment is released.

However, Booher reminds us that under Section 6331(i)(5) the 10 year statute of limitations period is suspended during the time that an offer in compromise (OIC) is pending. In Booher the OICs filed extended the limitation period beyond the general 10 year period.  Booher reminds us to obtain transcripts of account for taxpayers to ascertain whether or not the 10 year period has expired before taking action.  Such transcripts will show the existence of OICs and the duration of their pendency.

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