Tax Brake with Robert G. Nath, Esq.

So let's go through some of the more common tax “periods of limitation.” The one above - the statute of limitations on refund claims - is three years from the due date of your return, or two years from the date of payment, whichever is later. Watch that one, however. You could trip up on one by paying sole attention to the other.

The IRS also has statutes of limitation. Most people are familiar with the “three years to audit a return” deadline. That extends to 6 years if the IRS determines that you omitted more than 25% of your gross income. There is NO statute of limitations on fraudulent returns.

The IRS' statute of limitations on collecting a tax is normally 10 years. It starts when the IRS “assesses” your tax - that is, records your tax liability and sends you a bill.”

The IRS' deadlines can be extended in many ways: by written consent, by filing bankruptcy, by failing to file a return, by normal extension of time. Your statute of limitations on refund claims can not be extended, and in any case, the IRS is always reluctant to grant taxpayers extensions of statutory deadlines anyway.

In almost all cases, these statutes of limitation - yours and the IRS' - are ironclad. Either you meet them or you don't. There is very little wiggle room for “reasonable cause” or other excuse. So pay attention to them. They can be your worst nightmare - or your best friend.

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