Statutes of limitations

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Updated: 3/27/2003 1:10 pm
The United States Tax Court settles disputes between taxpayers and the Internal Revenue Service, or IRS (I-R-S), involving underpayment of federal income, gift, or estate taxes. Many cases heard in this court involve the IRS' trying to recover taxes from non-paying people. Indeed, if you don't pay your taxes, the IRS can seize your property or garnish your paycheck, but has only a limited amount of time within which to assess taxes against you. For example, there's a three-year statute of limitations from the date you originally filed the return, or two years from the date you paid your taxes. This means that the IRS must make a claim against you within three years of your filing or within two years of your paying taxes. Once an assessment has been made, the IRS has 10 years to collect the money. These time restrictions apply in most cases, but there are exceptions. For instance, if you under-report your income on your tax return by more than 25 percent, the IRS can assess taxes against you for six years, and there's no statute of limitations if you file a false and/or fraudulent return. This means that the IRS may audit and collect taxes from you at any time in the future. Statutes of limitations also apply if you're disputing a Notice of Deficiency from the IRS. In these cases, you have to file a petition no later than 90 days after the date the notice was mailed by the IRS. The time is extended to 150 (one hundred and fifty) days if the notice is addressed to a person residing outside the United States. The petition must be received within this statutory time frame or dated during the time frame by the United States Postal Service or other carrier. Keep in mind that statutes of limitations are federal laws, so it's not within the power of most courts to provide a time extension.

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