Statute Of Limitations Pretty Scary Stuff

You can’t even stop the clock by leaving the country

1. Have you failed to file a return for any tax year on your worldwide income? The statute of limitations never runs out to assess taxes for that year. The IRS can come after you 10 from now and assess taxes if you never filed the required return or forms.

 2. Have you failed to pay the taxes on past filed returns or something that has been assessed by the IRS? The normal statute of limitations is 10 years from the date of assessment and filing a tax lien (that may be a later date from the date you filed the return), to collect tax. However, if you leave the country or the tax is assessed while you are outside the USA, that statue of limitations is put on hold until you return, at which time it starts to run again. When you owe taxes and are outside the USA, the statute of limitations to collect those taxes never runs out.

3. Have you failed to file Foreign Bank Account Reporting Forms (FBAR or now form 114)? The statute of limitations to assess penalties for failing to file is six years from the due date of each year’s forms.

4. Three years from the date the return is filed is the normal statute of limitations for assessing additional taxes on your filed return. It’s six years from the date your filed if your return omitted 25 percent or more of gross income.

 5. The statute never runs out if you fail to file forms 5471, 8938 8865, or 3520 —3520A. The penalties for not including these forms with your return can be $10,000 or more.

 6. Criminal Tax Evasion - the statute for possible criminal prosecution is most often six years, but there are exceptions.

7. The statute of limitations for IRS action for civil fraud (this means an assessment of the 75% civil fraud monetary penalty against a taxpayer plus other penalties and interest), is indefinite and never runs out. Therefore if you cheat on your tax return or fail to file, you are never safe.

 8. If you owe $50,000 or more, the IRS can snatch your passport away when you enter the U.S. And without a passport you cannot leave until you work out a payment plan or pay the IRS in full.

This is not fun anymore.

 Don D. Nelson has been assisting clients with their U.S. taxes in Mexico for over 25 years. As a tax attorney, you can talk with him without fear of anything you may say being used against you because of the absolute protection of   attorney - client privilege.  His U.S. phone number is 949-480-1235. His number in Mexico is 624-131-5228.  Visit his website at: or email us with questions at