2009 Tax Debt

[GElite]

I live in Alabama, about a week ago I got a random letter from the state of Alabama saying that I owe them $2600 from my 2009 tax return. I was unaware that I even had a tax debt. I don’t have a problem paying, I would certainly like to see if I could get it reduced, but I was under the impression that if tax debt that isn’t collected within 10 years it couldnt be collected? Again, I don’t have an issue paying it, but why am I reading that it can’t be collected?

 

[Zigner]

I live in Alabama, about a week ago I got a random letter from the state of Alabama saying that I owe them $2600 from my 2009 tax return. I was unaware that I even had a tax debt. I don’t have a problem paying, I would certainly like to see if I could get it reduced, but I was under the impression that if tax debt that isn’t collected within 10 years it couldnt be collected? Again, I don’t have an issue paying it, but why am I reading that it can’t be collected?

If your failure to pay was fraudulent, or if you failed to file a return, there may be no limit on how long they have to collect.

https://revenue.alabama.gov/legal/investigations/tax-evasion/

Statute of Limitations

The criminal statute of limitations within which a criminal prosecution for tax evasion must begin is six years. The general rule is that the limitations period begins to run from the last affirmative act constituting the attempt to evade. The civil statute of limitations within which actions by the state to assesses and collect taxes owed is different. It can be much longer or it can be shorter. If there is evidence of fraud, or in the case of the failure to file a tax return, there may not be any time limitation to assess and collect the taxes owed. Thus, in the event that a criminal prosecution is not possible because of the expiration of the 6 year criminal limitation, the state may still be able to assess and collect the taxes owed.
(emphasis added)

 

[LdiJ]

I live in Alabama, about a week ago I got a random letter from the state of Alabama saying that I owe them $2600 from my 2009 tax return. I was unaware that I even had a tax debt. I don’t have a problem paying, I would certainly like to see if I could get it reduced, but I was under the impression that if tax debt that isn’t collected within 10 years it couldnt be collected? Again, I don’t have an issue paying it, but why am I reading that it can’t be collected?

I would not just up and pay it. Do you have any records from 2009 (I know, it was 10 years ago) that you could check to see if it was reasonable that you could owe that much? You want to take penalties and interest into account. I would also want to try to make sure that it is not a scam as well. I had a client get a very similar letter for Indiana and it was clearly a scam. I called the phone number on the letter and it was obviously not the Indiana Department of Revenue that I got. Try looking up the phone number for the Alabama Department of Revenue and call them and see how they answer the phone, then I would call the phone number on the letter to see if it's answered the same way.

If you think its them, then ask them to explain why, in detail, that they think that you owe the money.

 

[LdiJ]

If your failure to pay was fraudulent, or if you failed to file a return, there may be no limit on how long they have to collect.

https://revenue.alabama.gov/legal/investigations/tax-evasion/

Statute of Limitations

The criminal statute of limitations within which a criminal prosecution for tax evasion must begin is six years. The general rule is that the limitations period begins to run from the last affirmative act constituting the attempt to evade. The civil statute of limitations within which actions by the state to assesses and collect taxes owed is different. It can be much longer or it can be shorter. If there is evidence of fraud, or in the case of the failure to file a tax return, there may not be any time limitation to assess and collect the taxes owed. Thus, in the event that a criminal prosecution is not possible because of the expiration of the 6 year criminal limitation, the state may still be able to assess and collect the taxes owed.
(emphasis added)

That information is for the crime of committing tax evasion. It is not the statute of limitations for the collection of unpaid taxes. Here is a link to the Alabama Department of Revenue newsletter that explains very thoroughly how things work.

https://revenue.alabama.gov/wp-content/uploads/2017/05/Plain-Talk-II-Collection-of-Your-Tax-Liability.pdf

 

[Zigner]

That information is for the crime of committing tax evasion. It is not the statute of limitations for the collection of unpaid taxes. Here is a link to the Alabama Department of Revenue newsletter that explains very thoroughly how things work.

https://revenue.alabama.gov/wp-content/uploads/2017/05/Plain-Talk-II-Collection-of-Your-Tax-Liability.pdf

SMH -

I covered that.

Remember when I said: "If your failure to pay was fraudulent, or if you failed to file a return, there may be no limit on how long they have to collect"?

[rolleyes]

 

[Taxing Matters]

I live in Alabama, about a week ago I got a random letter from the state of Alabama saying that I owe them $2600 from my 2009 tax return. I was unaware that I even had a tax debt. I don’t have a problem paying, I would certainly like to see if I could get it reduced, but I was under the impression that if tax debt that isn’t collected within 10 years it couldnt be collected? Again, I don’t have an issue paying it, but why am I reading that it can’t be collected?

There are several things to understand here. First, the statute of limitations for collection of tax in Alabama is 10 years from the date the tax is assessed, similar to the rule for federal taxes. A 2009 return that was timely filed would have been filed sometime in 2010 and assessed a short time after that filing, e.g. a few weeks to a few months after the filing. So, for example, a 2009 return filed on April 15, 2010 might be assessed, say, on May 10, 2010. In that case, the statute of limitations would start to run May 10, 2010 and thus give the state until May 10, 2020 to collect it. Suppose that instead the issue is that Alabama audited your 2009 return and on June 20, 2012 assessed additional tax. The time limitation for collecting that additional tax would run from 6/20/2012 to 6/20/2022. Or suppose you never filed a return and the state did a substitute return for you and that return was assessed August 12, 2015. Then the time period for collection would rune from 8/12/2015 to 8/12/2025. See Alabama Code § 40-29-51.

So the first question here is when was this tax assessed? That's the first piece of information you need to know how long the state has to collect it. It has at least 10 years from that date to collect it. Next, that 10 years stops running when the taxpayer moves out of the state and won't start running again until the taxpayer moves back to the state. See Alabama Code § 40-29-52(c). So if you've lived out of state for awhile during the last 10 years the period for collection may have been extended. Also, the statute for collection is extended if you had filed bankruptcy since the tax was assessed or your assets had been under control of a court during that time.

Remember when I said: "If your failure to pay was fraudulent, or if you failed to file a return, there may be no limit on how long they have to collect"?

You unfortunately relied on an Alabama Department of Revenue general statement that conflated together the issues of assessment and collection and that squashed together criminal and civil issues into one paragraph. That effort at brevity by the state creates a misleading impression of what the law actually provides.

First, if a taxpayer's failure to pay is criminal, that would give the state a right to prosecute for the criminal offense. That does not, however, extend the time for civil collection of the tax. Read Alabama Code § 40-29-52 that I linked above. It provides the rules for when the time for collection is suspended. You'll find that criminal failure to pay is not listed as something that extends the period for collection.

Second, the failure to file a return does not affect how long the state has to COLLECT tax. Again, read the section regarding suspension of the time for collection. Rather, when a taxpayer fails to file a return, there is no limitation of time for the ASSESSMENT of tax. See Alabama Code § 40-2A-7(b)(2). So the failure to file a return allows the state to come in and make that assessment at any time. But once it does, that assessment is subject to the 10 year period for collection. The fact that the taxpayer did not file a return does not, as you implied in your statement, give the state unlimited time to collect that assessment.

The state is billing the OP for tax. So it has obviously made an assessment of the tax. That starts the 10 year period for collection, subject to the possibility of tolling the statute as I described above.

The OP needs to learn when the assessment was made to find out how long the state has to collect this and needs to know why he owes to determine if he might have any shot to challenge that assessment now.

And, while I believe your rolling eyes was not appropriate given that your statement was not really correct, I'll point out that in future if you want to roll eyes in this forum there is an emoji you can use for that:

 

[Zigner]

... there is an emoji you can use for that:

Ahh, it's (colon rolleyes colon) I'll have to remember that

 

[Taxing Matters]

Ahh, it's (colon rolleyes colon) I'll have to remember that

Why type it out when you can just select it from the tool bar pop up?

 

[Zigner]

Why type it out when you can just select it from the tool bar pop up?

I'm a typist. It's considerably faster for me to type : rolleyes : than it is to stop, move the mouse, click, wait for it to appear and then choose it.

 

[LdiJ]

SMH -

I covered that.

Remember when I said: "If your failure to pay was fraudulent, or if you failed to file a return, there may be no limit on how long they have to collect"?

[rolleyes]

There is a lot of good information in that newsletter besides the statute of limitations. It explains the entire collection process. That is why I linked to it.

 

[Zigner]

There is a lot of good information in that newsletter besides the statute of limitations. It explains the entire collection process. That is why I linked to it.

Fair enough - and I stand (partially) corrected

 

[Taxing Matters]

I'm a typist. It's considerably faster for me to type : rolleyes : than it is to stop, move the mouse, click, wait for it to appear and then choose it.

I'm a typist, too, but I add the emoji's later after rereading the post and deciding whether and where they are appropriate, and for that the pop up works just as well.

 

[Zigner]

I'm a typist, too, but I add the emoji's later after rereading the post and deciding whether and where they are appropriate, and for that the pop up works just as well.

Yep, I would agree with you there. It's just as fast in that situation.

 

[PayrollHRGuy]

Yep, I would agree with you there. It's just as fast in that situation.

Plus, TM has to get up in the menu bar anyway to set his uppity fonts.

 

[Taxing Matters]

Plus, TM has to get up in the menu bar anyway to set his uppity fonts.

That's easy, just a one click at the start of drafting a post. Much easier than typing the bb code for it. And there are a lot of factors that went into my choice of font. It's not strictly for appearance.