Per IRC 6601(g), the interest can be collected so long as the underlying tax is still collectible.
Does anyone know the IRC section that deals with the failure to pay/file penalties and the statute to collect? I've searched and cannot find the statutory timeframe to collect penalties.
IRC 6651 only covers calculations
Collection Statute on penalties?
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jcolvin2
- Grand Master Consul of Quatloosia
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- Joined: Tue Jul 01, 2003 3:19 am
- Location: Seattle
Section 6665(a) provides that additions to tax and penalties shall be assessed, collected, and paid in the same manner as tax. It also provides that references to "tax" imposed by Title 26 shall be deemed to refer to additions to tax and penalties as well. Generally, courts have relied upon this statute in determining when penalties must be assessed. (However, there is authority that the 6700 and 6701 penalties, which are not linked to the filing of a return, have no statute of limitations.) The failure to file and failure to pay penalties are linked to the filing of a return.
Some have argued that these penalties are subject to the 3 year statute of limitations, running from the filing of a return. However, the failure to pay penalty can be imposed at a rate of 0.5%/month for 50 months. It wouldn't make sense to have the SoL expire before the penalty could even be assessed. I think that the correct analysis is that the statute of limitations should expire 3 years from the act which subjected the taxpayer to another month worth of failure to pay penalty (i.e. the failure to pay the tax).
This being said, I think that the IRS often improperly assesses additional failure to pay penalty (often upon receipt of payment) long after the expiration of a three year period from the last month where the penalty applied. For example, the last failure to pay penalty might have accrued in month 50, but is not assessed until month 95. Under what I believe is the correct analysis, the penalty should have been assessed by month 86. Because the amounts are relatively small, I have not yet run accross a case worth litigating.
Some have argued that these penalties are subject to the 3 year statute of limitations, running from the filing of a return. However, the failure to pay penalty can be imposed at a rate of 0.5%/month for 50 months. It wouldn't make sense to have the SoL expire before the penalty could even be assessed. I think that the correct analysis is that the statute of limitations should expire 3 years from the act which subjected the taxpayer to another month worth of failure to pay penalty (i.e. the failure to pay the tax).
This being said, I think that the IRS often improperly assesses additional failure to pay penalty (often upon receipt of payment) long after the expiration of a three year period from the last month where the penalty applied. For example, the last failure to pay penalty might have accrued in month 50, but is not assessed until month 95. Under what I believe is the correct analysis, the penalty should have been assessed by month 86. Because the amounts are relatively small, I have not yet run accross a case worth litigating.