I saw a post online that said… ‘The IRS only has 10 years to collect your unpaid tax debt. After 10 years expires, the IRS must, by law, put a credit on your account for the amount that cannot be collected, and move your account balance to zero.’
This means that if you wait long enough, your tax bill will go away, right? Wrong!!! The 10 years starts when the IRS has determined and informs you of how much you owe. In general, they have 3 years to determine how much you owe. During those 10 years your balance due will grow rapidly with the accumulation of fines and interest. In addition, they can send you all sorts of letters, garnish your pay, confiscate your property (depending on how much you owe). They are not going to ‘accidentally’ forget about the fact that you owe them.
All that being said, if you fail to file a return, file a fraudulent return, or willfully attempt to evade your tax responsibility, there is no time limit.
What about time limits on what IRS owes you? If you are due a refund from the IRS, you have only 3 years to file for it. After that, your money belongs to the IRS.
This all tends to make the IRS sound like the ultimate bad guy! If you file your tax returns when you are supposed to, before April 15 of the following year, and cooperate with the IRS in payment of any tax due, you avoid all the stuff we just talked about.