The statute of limitations to collect a tax debt is ten years, but in one case, the IRS went back 30 years to collect unpaid payroll taxes. When it comes to payroll taxes, the IRS is most likely not to forget. Employees must ensure that their employers withhold payroll taxes from their monthly wages so that they do not get in trouble with the IRS over unpaid taxes.
The case of Joel Beeler surprises everybody because normally, the IRS does not go back more than 10 years to collect taxes. In his case, the IRS went back 30 years! It seems like Mr. Beeler might be out of luck. The IRS chose to act on a three-decade-old case, reminding taxpayers that they can come after them anytime.
The IRS charges penalties on any and all amounts of tax debt. When the taxes do not reach the IRS on time, they will charge penalties and interest on the amount due. The worst news is that this penalty can be charged against more than a single person responsible. The IRS can ask them all to pay, hoping someone out of them will pay up fast. The ultimate aim of the IRS is to get back the entire amount owed as fast as they can.
In the case of Beeler, he was an officer of the company, Equidyne Management, along with two other officers. The company did not pay employment taxes in 1982 because it was a sinking ship. A year later, it filed for bankruptcy. The IRS assessed a 100% penalty against all three officers.
After ten years, the IRS and the three officers settled the matter. The story would have ended there but for a mistake by the IRS. They released the tax lien that had been placed and was not to be removed. They realized their mistake after years and went after Beeler.
The tax court found Beeler owed the IRS, but on appeal, it said that the burden of proving that the other two partners did settle the matter with the IRS was on the tax agency.
The lesson from Beeler versus the IRS is that even when the IRS makes a mistake, it is the taxpayers who pay. If you have an unpaid payroll tax you are looking to resolve, audit the IRS for mistakes.