The IRS Option to Sue You

Generally, the IRS has 10 years to collect from someone. This period starts on the date of assessment and can be tolled (suspended) for a variety of different reasons. Once the Statute runs out, the IRS is barred from doing anything to collect on the debt.

A big part of the strategy to minimize the impact the IRS can have on someone’s life evolves around getting to that statute date. You might be tempted to believe that your almost there at year nine, but you need to be aware that the IRS has a very big weapon in its arsenal. They could sue you in Federal Court and get the debt reduced to a judgement. Judgements usually run 20 additional years from the date of judgment.

When will the IRS head for court? According to the Internal Revenue Manual, the Revenue Officer should consider doing so in cases where:

  • There is a significant amount of money involved. How much is considered significant is anybody’s guess. My guess is under $100,000 not likely at all, over $500,000 there is probably a good chance.
  • The taxpayer has some asset that they could get to if they had more time. Examples include IRA accounts, life insurance policies with a large cash surrender value, or maybe a pending inheritance.
  • The taxpayer’s personal residence has a significant amount of unclaimed equity built up and the IRS wants to force the sales.

Finally, I have heard of cases where the taxpayer did something incredibly stupid such as buying an expensive yacht or luxury vacation in the last years before the statute would have run. This kind of stuff is pretty much guaranteed to tick off the Revenue Officers and result in them suing for judgment.

If you or someone you know has received a Notice of Intent to Levy or some other federal or state tax issue, please feel free to contact me at either (352) 317-5692 or email

Author: Jim Payne

Jim Payne, a Florida Certified Public Accountant (CPA) since 1976, offers candid insights on getting square with the IRS — with the least pain, and at the lowest cost — with (or without) the help of a tax representative. Mr. Payne is a former IRS agent and expert in business profitability, IRS audits, IRS payroll tax, and IRS non-filer issues. As a Tax Representative, his goal is clear: " I will speak on your behalf to all IRS agents, so you never have to, and I'll guide you in executing a strategy to resolve your IRS problem so you can get back to enjoying life."

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