Collection Statute Expiration
State
While the Internal Revenue Code stipulates the IRS has 10 years to collect a tax debt, there are no such provisions over the State Tax Authorities. For instance, the Franchise Tax Board in California and the Department of Taxation and Finance in New York each have 20 years to collect on a liability. Once two decades have passed, only then will your debt expire with these State Tax Authorities. If you hire us as your power of attorney, we can determine exactly when your state tax debt is scheduled to expire or if the debt has expired already. Contact us today for a free consultation if you think your state debt may have expired or is close to expiration.
Questions?
Why can the State Tax Authorities collect for 20 years if the IRS can only collect for 10?
Why is the sky blue? There’s no real rhyme or reason, other than that the states can do what they want. It’s unfortunate, but it is what it is. The moral of the story is to resolve the state taxes as quickly as possible, especially if you live in a state like California and New York. Not only do they get 20 years to collect, but they are also the states most likely to suspend your driver’s license, in addition to bank levies and wage garnishments.
Do all state tax debts expire after a certain amount of time?
While the 20 year timeframe some states enforce can seem particularly brutal in comparison with the IRS 10 year statute, there are plenty of states which do not let the tax debt expire. Each state is different, so it’s worthwhile to evaluate each state debt in light of a possible statute. But it’s probably best to assume your state does not allow the debt to expire and then be pleasantly surprised if it does, since expiration is not the norm. Contact us today to see if/when your state tax debt will expire.
I owe taxes in California but I no longer live there. They can’t collect from me, right?
Wrong. Many State Tax Authorities, and the Franchise Tax Board in California especially, will track you down no matter what state you live in, and their penalties & fees will often be higher than what the Feds would charge for a similar debt. In fact, we’ve had clients that have been hassled by the authorities in certain states due to past due tax debts, so even if you don’t live in that state and you pass through, you could get into trouble. Reach out today for a consultation if you think you have a tax debt from another state.