My brother owes $100,000.00+ from payroll withholding taxes he failed to pay upon closing a business. The IRS filed a tax lien on him personally as he was responsible. He is very depressed and lives on a very small income in a rooming house now. He pay little or nothing to the IRS in spite of threats. After 10 years, which is approaching, will this debt be cancelled?

IRS collection statute of limitations

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Originally Posted by Fr_Chuck

IRS collection statute of limitations

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Well, if read this right, since my brother has signed no agreements with the IRS, he should be out of the woods when the 10 years is passed. He did make an offer in compromise application that was rejected after perhaps a year.. . So maybe that would add a year to the 10 year limit.

The main thing is that he doesn't have the will to try to get a good job with this lien for 100% penalty is in effect as he supposes all his wages will be seized.

By law, the IRS has the authority to collect outstanding federal taxes for ten years from the date your liability is due. If you enter into an installment agreement and you cannot fully pay the amount you owe within the normal collection period, the IRS may request you to sign a waiver to extend the collection period. The collection period is automatically extended when a taxpayer files for bankruptcy or an Offer in Compromise.

For how long is the collection period automatically extended if one files for bankruptcy or an offer in compromise? I think my brother filed for both right after he was assessed. I am trying to bring him out his depression and try start earning a decent living.

Lloyd Miller,

Tax Lien is released when the debt owed is paid or if it becomes unenforceable due to time lapses. If the taxpayer has an Offer in Compromise in place or if the outstanding debt is paid in full, the Tax Lien will also be released.

There are a few reasons the IRS may withdraw a Tax Lien before the debt is paid off in full and they are the following:

1. The filing of the notice against the taxpayer was premature or not filed correctly
2. The taxpayer has made an agreement with the IRS to pay back the outstanding debt amount
3. The withdrawal of the notice would allow the taxpayer to pay off the debt
4. The withdrawal would be in the best interests for the taxpayer and the government combined

The following IRS link may also help you with said tax issue: Tax Liability

Sage