The Seven Year Rule for Recent Taxes Owed

The Internal Revenue Service (IRS) has a general rule that it can attempt to collect any taxes owed from the three most recent tax years. However, there are some circumstances in which the IRS may attempt to collect taxes from a taxpayer beyond the three year statute of limitations. Here are some common situations in which the IRS may revive an old tax debt.

Reasons the IRS May Go After You After 7 Years

The seven year rule is not set in stone, and there are certain circumstances in which the IRS may come after you even if your tax debt is more than seven years old. Some of these circumstances include:

If you filed a fraudulent return: The statute of limitations does not apply if you filed a fraudulent return or did not file a return at all. In these cases, the IRS can attempt to collect your taxes at any time.

If you made an error on your return: If you amend your return because you made an error, the statute of limitations starts over from the date that you amended your return. This is because, when you amend your return, you are essentially admitting that your original return was inaccurate.

If you agreed to a payment plan: If you entered into a payment plan with the IRS—such as the fresh start program which can consist of an installment agreement or Offer in Compromise—the statute of limitations stops running while you are making payments under the terms of your agreement. Once you stop making payments, however, the statute of limitations will start running again.

If you issued a check: If you wrote a check to the IRS that bounced, the statute of limitations does not begin until the date that the check was cashed by the IRS. So, even if your tax debt is more than seven years old, if you wrote a check for payment that never went through, the IRS may still come after you for payment. 

The seven year rule is a general guideline for how long the IRS has to collect on unpaid taxes. However, there are certain circumstances in which this timeframe may be extended. Therefore, it's always best to consult with a tax professional before assuming that your tax debt is too old for the IRS to collect on.