Question

. An individual reports $100,000 on his personal income tax return, and is audited. The audit concludes with an assessment alleging that the taxpayer failed to report an additional $30,000 of income. The statute of limitations to assess the taxpayer is three years. True or False.

Answer 1

The IRS statute of limitations gets extended for an even longer time when there is a substantial omission (more than 25 percent) of gross income on the return. In these circumstances, the time limit for the IRS to make its assessment gets stretched out to six (6) years from the date the return is filed or deemed filed, whichever is later.The tax code gives the IRS three years to audit your tax return and 10 years to collect any tax you might owe.

The IRS Has 10 Years to Collect Outstanding Tax Debts

This deadline is measured from the day a tax liability has been finalized, which can happen in a number of ways. Your liability might be considered finalized because it's the amount of tax reported on a tax return that you've filed, because it's an assessment of additional tax from an audit, or because it's a proposed assessment that has become final.

The IRS has 10 years to collect the full amount from the day a tax liability is finalized, plus any penalties and interest. The remaining balance disappears forever if the IRS doesn't collect the full amount within the 10-year period because the statute of limitations has expired.

Therefore the individual is liable for the tax amount owed which he failed to pay tax for the period even it is abound out of 3 years..