Discussion:CSED and Installment Agreements

I have SFR's filed for tax years 1994, 1995 and 1996.

I don't have a transcript and can't get one in the time allowed.

I have to file 433F by 7/25

Question 1. Does an Installment Agreement extend the CSED?

Question 2. If I now file a return for 1994, 1995, 1996 and request audit reconsideration does this extend CSED?

Thank you Any help would be greatly appreciated

2 NO, but it is highly recommended in order to get the Statute for Assessment started

Discussion:Statute of limitations

I was told in another post: If the Service files returns under 6020(b), the deficiency procedures must be followed. Sometime after the 90 days have expired, the Service will ASSESS the tax calculated on the SFR. The 10 year collection statute then runs from that day of THAT particular assessment. The "real" return is not required to start the process ultimately concluding in the assessment.

I want to be careful not to extend the IRS statute further into the future.

Although in your post and answer by Riley Discussion:Report of Accounts, he says the CSED has never begun. We all hate to disagree with him, although a few of us have at one time or another.

I am 60 years old, have only 5(or less) years of work left in me. I have a tax debt of nearly $40,000 dollars. The debt is one year of that income. I am, in part, basing my question again on the post of NYEA:

Based on the §6020(b), it is possible, though probably almost a zero probability, that the Service could come back sometime in the future with another assessment from one of those years. But the reality is - it doesn't happen

Are there some risks I'm not aware of? I'm not only here to ask questions but also to learn

I would file the missing returns. AND, I would be considering an Offer In Compromise, using paid professional assistance. $40,000 is a decent income in many parts of the US, so you should be able to afford good representation.

Why an OIC and not just a plain Installment Agreement?

Thus, I always recommend filing a real return. Also, taxes on an SFR are not dischargeable in bankruptcy.

Back to your new question. The Service’s current position is that the original assessment on the SFR starts the 10-year collections statute, and the “real return” filed by the taxpayer after the deficiency assessment does not start a new 10-year collection period. See CCA 200149032.

I concur with Riley - the taxes on an SFR are not dischargeable (unless of course, the taxpayer has afixed his/her signature to the SFR to make it their return)

Perhaps this snip from CCA 200149032 will lend some credence to what I posted in a different thread. Caps added for emphasis.

From United States v. Updike, 281 U.S. 489 (1930), clarifies that section 6501(b)(3) does not affect the collection statute in section 6502. The Court in Updike, ruled that once the Service ASSESSED a liability against a taxpayer, where the taxpayer did not file a return, the six-year (now ten-year) statute of limitations on collection began. The Court stated, “[w]here, in a 'no return' case, an assessment, which under paragraph (a), may be made at any time, has IN FACT BEEN MADE, proceeding to collect must be begun within six years thereafter; but where there has been no assessment, the proceeding may be begun at any time.” Thus, the exception listed in section 6501(b)(3), in reference to collection, applies only to the statute of limitations as provided in section 6501(a) for the collection of tax before an assessment is made. The collection statute in section 6502 is ten years from the date of any assessment; it does not matter that the assessment is related to a section 6020(b) return.

I will call and get CSED info in the morning.

Filing "real" returns would reduce the tax owed by about 1/3. I do have the income to pay the entire amount over 5 years or less.

I guess what I'm looking for is a pay plan that will not extend but allow the tax owed to drop off during the payment period. Is there such an animal?

If you can lower the liability, you should certainly file a correct return. It will not change the statute dates but will show up on the record as a reduction in the original tax and penalty.