Sixth Circuit Talks Tax Collection Limitations Period

Sixth Circuit Talks Tax Collection Limitations Period

In a recent case that the United States Court of Appeals for the Sixth Circuit heard, the Court explored the statute of limitations that exist for collecting a tax assessment.

In 2005, a tax board assessed a man for income taxes from three years prior, but in 2006 he died. In 2009, a proof of claim was filed in the probate proceeding, and the probate process is still ongoing.

In 2016, the government filed a collections proceeding for the 2005 owed taxes, seeking to reduce the assessment to a judgement.

According to Timothy Todd on Forbes.com:

“On appeal, the issue in the case is the operation of 26 U.S.C. § 6502(a), which provides

(a) Length of period.–Where the assessment of any tax imposed by this title has been made within the period of limitation properly applicable thereto, such tax may be collected by levy or by a proceeding in court, but only if the levy is made or the proceeding begun–

(1) within 10 years after the assessment of the tax, or

(2) if–

(A) there is an installment agreement between the taxpayer and the Secretary, prior to the date which is 90 days after the expiration of any period for collection agreed upon in writing by the Secretary and the taxpayer at the time the installment agreement was entered into; or

(B) there is a release of levy under section 6343 after such 10-year period, prior to the expiration of any period for collection agreed upon in writing by the Secretary and the taxpayer before such release.

If a timely proceeding in court for the collection of a tax is commenced, the period during which such tax may be collected by levy shall be extended and shall not expire until the liability for the tax (or a judgment against the taxpayer arising from such liability) is satisfied or becomes unenforceable.

As relevant here, as § 6502 notes, after the government assesses the tax, ‘such tax may be collected by levy or by a proceeding in court, but only if the levy is made or the proceeding begun . . . (1) within 10 years after the assessment of the tax . . ..’”

If you would like to learn more about this case (United States v. Estate of Chicorel) click here.

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