Living in Australia Have IRS debt how does SOL work?

[Anonymous]

Hello! Stumbled across this forum and hope you can help us. My husband (who is American) and I (ex permanent resident) left Florida in 2007 to live permanently in Australia. Apparently we made mistakes on our 2007 return relating to how his 401K payout was handled. We owe roughly $8000 to the IRS and are trying to work out a way to pay it or reduce it. Obviously the process is very difficult from overseas. Very long process, relying on IRS info and what I can find on the net. We put in an OIC which was not officially accepted or rejected - they offered an installment plan which was excessive because at the time my husband was unemployed (for a year!) - they advised us to withdraw it. We did - I am starting to think we did the wrong thing!! My question is - as we are living overseas permanently (since 2007)  is the SOL suspended indefinitely? (I read that in their collection process booklet - that "while you are residing outside the US, if you are absent for a continuous period of at least six months") What exactly does that mean?? I am lost as to what to do from here on, we do owe the tax and cannot afford to pay what they are insisting we pay. We are making a small monthly payment towards the debt ($50 per month). By making voluntary payments (we have not signed up for an installment plan) does that suspend the SOL? I cant even work out when the SOL should start?? We do not want to be in a situation of travel to and from the US becoming difficult etc. Any help you can offer would be greatly appreciated, thanks Teresa.

[RobertEG]

I would first go to www.irs.gov.  This is a very complex federal tax issue.

My novice understanding is that  federal, not state, law governs the SOL on tax debt, and sets a period of 10 years from the date they sent you their first bill to collect the tax debt. However, IRS has a full arsenal of ways to extend the period they can still collect the tax beyond 10 years from their intitial bill for collection.  I see no restrictions based on current residency.

I dont think payments on your part have any real bearing on their SOL period.  "Suspending" the SOL on the part of the IRS is not something I am aware of, but I am not a tax lawyer.  That would certainly not be to your benefit.  It would "suspend" any legal defense you might offer.

In a brief review of the IRS site, I came across the statement that you can find out when the statute of limitations expires on your tax bill by requesting a Record of Accounts (ROA) from IRS for each tax year you owe.

I think yuu need the services of a federal tax lawyer, and not advice on a credit forum.

[Anonymous]

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@Anonymous wrote:

Hello! Stumbled across this forum and hope you can help us. My husband (who is American) and I (ex permanent resident) left Florida in 2007 to live permanently in Australia. Apparently we made mistakes on our 2007 return relating to how his 401K payout was handled. We owe roughly $8000 to the IRS and are trying to work out a way to pay it or reduce it. Obviously the process is very difficult from overseas. Very long process, relying on IRS info and what I can find on the net. We put in an OIC which was not officially accepted or rejected - they offered an installment plan which was excessive because at the time my husband was unemployed (for a year!) - they advised us to withdraw it. We did - I am starting to think we did the wrong thing!! My question is - as we are living overseas permanently (since 2007)  is the SOL suspended indefinitely? (I read that in their collection process booklet - that "while you are residing outside the US, if you are absent for a continuous period of at least six months") What exactly does that mean?? I am lost as to what to do from here on, we do owe the tax and cannot afford to pay what they are insisting we pay. We are making a small monthly payment towards the debt ($50 per month). By making voluntary payments (we have not signed up for an installment plan) does that suspend the SOL? I cant even work out when the SOL should start?? We do not want to be in a situation of travel to and from the US becoming difficult etc. Any help you can offer would be greatly appreciated, thanks Teresa.

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Unfortunately any time you are physically absent from the jurisdiction -- in the present case the U.S. -- the statute of limitations tolls (suspends). 

Where you could face major problems is if the IRS classifies your situation as criminal non-payment of taxes.  If they decide your non-payment is criminal in nature, you will be denied a US passport. 

[Anonymous]

Thanks to both 06 and RobertEG for your input. Yes this is very complex and my only avenue of assistance in Australia was through the US Consulate who had a list of professionals who will help with US tax law - of course there aren't many of us here and no one wants to do that kind of work, so we got no help.

Very difficult when you have made honest mistakes, we have filed everything on time as asked but when you have to choose between buying groceries or paying your tax debt, my kids will always get fed! We are not trying to avoid paying this, just trying to understand what our options are and how best to take care of it. The financial side of the OIC is very discriminatory to overseas residents as they do not have any understanding of cost of living overseas. For instance - the cost of home phones & internet are about the same here as in the US, however we pay 3 times the amount you do for gas & electricity and less for mobile phones?? Go figure?? None of which matters to the IRS.

Sounds like the SOL can be twisted how the IRS prefers, to suit them. I have emailed someone at (edited to remove link), will see what comes of that. Thanks for your help.

[Anonymous]

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@Anonymous wrote:

Thanks to both 06 and RobertEG for your input. Yes this is very complex and my only avenue of assistance in Australia was through the US Consulate who had a list of professionals who will help with US tax law - of course there aren't many of us here and no one wants to do that kind of work, so we got no help.

Very difficult when you have made honest mistakes, we have filed everything on time as asked but when you have to choose between buying groceries or paying your tax debt, my kids will always get fed! We are not trying to avoid paying this, just trying to understand what our options are and how best to take care of it. The financial side of the OIC is very discriminatory to overseas residents as they do not have any understanding of cost of living overseas. For instance - the cost of home phones & internet are about the same here as in the US, however we pay 3 times the amount you do for gas & electricity and less for mobile phones?? Go figure?? None of which matters to the IRS.

Sounds like the SOL can be twisted how the IRS prefers, to suit them. I have emailed someone at (edited to remove link) will see what comes of that. Thanks for your help.

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Is there any particular reason why you think the IRS should even care that you have chosen to live in a more expensive location?

The IRS is not twisting the SOL.  There is no state in the Union that does not toll the SOL upon physical absence from the state.  Why do you even think they shouldn't toll it?