Is it possible to completely “walk away” from any tax liabilities?
Yes. With certain exceptions IRS has 10 years from the date a tax is assessed to collect that tax; once the 10 years is up all collection activity must cease and any tax liens that have been filed must be released. (Typically a tax is “assessed” as the result of processing a tax return shortly after it is filed.) The three major exceptions to the 10-year rule are 1) if the taxpayer is involved in bankruptcy proceedings, 2) if he or she files an offer in compromise which is either rejected by IRS or withdrawn by the taxpayer, and 3) if the taxpayer enters into an “installment agreement” with IRS, in which case IRS often requires the taxpayer to extend the 10-year collection period. If any of those things occurs the 10-year period is extended, for various lengths of time. Further, if the taxpayer is a corporation and the taxes owed are employment taxes, a portion of such taxes canmade to “go away” by effecting a form ofcorporate restructuring.
