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IRS wins decision in 1982 payroll tax case

Georgia taxpayers may know that the law generally gives the IRS three years to make an assessment or audit a tax return. There are exceptions to this rule, and the agency often shows relentless determination in their collection efforts even when the taxes in question are decades old. This was demonstrated in a 2013 Tax Court case when the IRS prevailed in court in a case involving payroll tax penalties incurred in 1982.

The IRS was seeking to collect from a man who had been an officer of a company that had failed to submit employment taxes in 1982. The agency first assessed a 100 percent penalty against three of the management company's officers. The IRS can seek payment from any person identified as a responsible individual, but the amount in question need only be paid once. The agency settled the case in 1995, and judgments were subsequently placed against the officers.

The judgments gave the IRS 10 years to collect, but the agency made a mistake in 2001 and released the tax lien it had placed against one of the officers. The error was discovered years later, and the IRS was able to prevail after proving to an appeals court that the other two officers had not already paid the taxes in question.

This case shows how dogged IRS collection efforts can be. These efforts can include placing levies or liens against wages and property and seizing assets such as cars and and bank accounts. An experienced tax attorney may help those facing such sanctions by filing an appeal against an IRS levy notice. An attorney may be able to prevent asset seizures or secure the return of property already seized.

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