Finance

When Does the Statute of Limitations Begin on Unpaid Payroll Taxes?

Looking for the answer to the fundamental question of “when does the statute of limitations begin on unpaid payroll taxes?” Read on to find more.

If you own a business, you are responsible for paying payroll taxes on behalf of your employees. Failing to do so can result in serious consequences, including hefty fines and penalties.

In addition, the Internal Revenue Service (IRS) can use its powers to collect unpaid payroll taxes. However, there is a statute of limitations on how long the IRS can take action against a taxpayer for unpaid payroll taxes. This article will provide a complete overview of when the statute of limitations begins on unpaid payroll taxes.

What is the Statute of Limitations?

The statute of limitations is the period within which legal proceedings must be commenced. In the case of unpaid payroll taxes, the statute of limitations determines the amount of time the IRS has to collect unpaid taxes from the taxpayer.

When Does the Statute of Limitations Begin?

The statute of limitations for unpaid payroll taxes begins on the date the tax return was due or the date the tax return was acted, whichever is later. The statute of limitations is generally three years from this date. However, there are some exceptions to this general rule. Here are a few things to keep in mind:

  • If you file your tax return late, the statute of limitations begins on the date you filed the return.
  • If you filed your tax return early, the statute of limitations still begins on the due date.
  • If you filed a fraudulent tax return, there is no statute of limitations.
  • If you failed to file a tax return, there is no statute of limitations.

What Happens After the Statute of Limitations Expires?

Once the statute of limitations expires, the IRS can no longer collect unpaid payroll taxes from the taxpayer. This means that the taxpayer is no longer liable for unpaid taxes. However, it is important to note that the statute of limitations only applies to the IRS’s ability to collect unpaid taxes. The taxpayer is still required to pay the taxes, and the IRS can still take other actions to collect the taxes, such as placing a lien on the taxpayer’s property or garnishing their wages.

Conclusion

As a business owner, it is essential to understand when the statute of limitations begins on unpaid payroll taxes. By doing so, you can ensure that you take the necessary steps to address unpaid taxes and avoid any potential legal consequences.

Remember, the statute of limitations is generally three years from the due date of the tax return or the date it was filed, whichever is later. However, there are some exceptions to this rule, so it is important to consult with a tax professional if you have any questions or concerns.

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Christopher N. Muncy
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