How Long Can the IRS Collect Back Payroll Taxes?  

Section 6502 of the Internal Revenue Service Code gives the IRS ten years to collect back taxes, including unpaid payroll taxes, from when they were first assessed. However, it might be challenging to determine when this ten-year period begins and whether it has been tolled or suspended after the IRS has issued a written notice. 

If your business owes back payroll taxes, even if it has not yet received a notice of nonpayment from the IRS, our team at Ayar Law in Farmington Hills, Michigan, can help. When you deal with the IRS, you will always be in a better position if you take proactive measures. A payroll tax lawyer from our firm could effectively and efficiently assist you with those measures. 

How can you determine when the ten-year back payroll tax collection period begins? 

Contrary to many assumptions, the ten-year lookback period does not begin when you last filed a payroll tax return or paid payroll taxes. Instead, it starts when you file a return after the date when it is due or when the IRS flags your return as missing. This could add several months or more to the lookback period.  

For example, the IRS could pursue back payroll taxes that went unpaid for eleven or twelve years. In addition, they will almost certainly levy penalties and interest that can add thousands of dollars to your debt. Retaining an experienced tax attorney to negotiate and work with the IRS on your behalf is best. 

Can the ten-year statute of limitations on payroll tax collections be suspended or tolled? 

Under certain circumstances, the ten-year payroll tax lookback period will be suspended or tolled, including: 

  • A bankruptcy filing by the party that owes the taxes 
  • A written request for an installment period, which will extend the lookback period even if the request is denied 
  • A taxpayer’s submission of an Offer in Compromise to pay a lesser amount than what is owed 
  • When the taxpayer is out of the country for more than six consecutive months.

The start date of the ten-year payroll tax collection period and any suspensions of that period will vary according to each taxpayer’s specific situation.  

Call Ayar Law about unpaid payroll tax issues 

Call Ayar Law in Farmington Hills, Michigan, for a confidential consultation about unpaid payroll tax issues that may threaten your business and livelihood. The IRS will not ignore those issues. However, when you address them proactively, you can resolve them with reduced penalties and interest and keep your business moving forward without interruption from the IRS.   

We represent businesses and individual taxpayers throughout the United States. If you have an unpaid payroll tax problem, please call our offices to begin taking the necessary steps to keep the IRS at bay.