The statute of limitations is a time limit placed on the state or the federal government to assess tax liability, collect taxes, or take legal action against a taxpayer or business. Because Texas does not impose income tax on its citizens, the statute expiration date for income taxes comes from federal law.
For other taxes, such as sales tax and property tax, the statute of limitations is governed by state tax laws and dealt with through the Texas Comptroller’s Office. There are certain situations in which the statute of limitations can be extended, such as tax fraud, a substantial omission, or a failure to file a tax return.
To learn more about your tax obligations and the statute of limitations for income tax in Texas, contact Ronald Arthur Stearns Sr. PLLC.
Ronald Arthur Stearns Sr. PLLC
Ronald Arthur Stearns Sr. PLLC has the experience and skills you need to deal with complex tax matters in Texas. He can help you file tax returns, deal with tax debt, pay back taxes, represent you in any action brought against you by the IRS, and ensure that your legal rights are protected.
If a taxpayer failed to meet their tax obligations, tried to evade taxes, or committed fraud in their tax returns, they can face serious consequences. Ronald Arthur Stearns Sr. PLLC has handled many complex tax cases, and he has what it takes to fight against the IRS.
With almost thirty years of litigation experience and an A+ Better Business Bureau Rating (BBB), you can rest assured knowing that your tax matters are being handled by the best in the business.
Call our law firm today to schedule an initial consultation with an experienced Texas tax lawyer at 210-853-2135.
Income Tax in Texas
Texas is one of nine states that does not impose income tax on citizens. In fact, Texas is quite tax-friendly and has one of the lowest tax burdens in the country. However, Texans are still subject to federal income tax, which is imposed by the Internal Revenue Service (IRS).
IRS income tax rates are determined by the federal government and are subject to change based on inflation and an increase in gross income. The tax rates for the 2023 tax year are as follows:
- 10% on income up to $11,000.
- 12% on income between $11,001 and $44,725.
- 22% on income between $44,726 and 95,375.
- 24% on income between $95,376 and $182,100.
- 32% on income between $182,101 and $231,250.
- 35% on income between $231,251 and $578,125.
- 37% on income above $578,126.
If you are married or are the head of a household, different tax rates will apply. The tax return filing date is usually on April 15 of each year, unless this day falls on a weekend or a public holiday.
Other Types of Tax in Texas
As Texas does not impose a state income tax, there are other types of taxes that generate revenue for the state. These taxes include the sales tax and the property tax. There are also certain taxes imposed on businesses in the state, including the franchise tax, employment tax, and sales and use tax.
There is a separate statute of limitations placed on these types of taxes within the state, and they are handled by the Texas Comptroller’s Office. Generally, the statute of limitations for assessing and collecting sales tax is four years. However, there are exceptions to this statute of limitations, including fraudulent activity, an omission of over 25%, and a failure to file tax returns.
Statute of Limitations For Tax in Texas
A statute of limitations is a time limit placed on the ability of the IRS and state authorities to assess and collect income taxes from taxpayers. Once this statute of limitations has passed, the IRS can no longer assess your income taxes, conduct an audit, or collect taxes for the specific tax year.
Because there is no income tax in Texas, there is no statute of limitations for income tax under state tax laws in Texas. However, there is a statute of limitations for IRS income taxes and other types of taxes in Texas, such as the sales tax, property tax, unemployment tax, and franchise tax.
The IRS statute of limitations for assessing taxes is three years from the due date of the tax return or the tax return filing date, whichever is later.
Exceptions to The Statute Limitations Period
The statute of limitations sets a time limit of three years for the IRS to collect taxes, conduct a tax assessment, and take legal action against taxpayers. However, there are certain exceptions to this time period that will extend the statute expiration date, including tax evasion, tax fraud, failure to file, and extension agreements.
False or Fraudulent Return
A false or fraudulent return makes the IRS statute of limitations unlimited. This means that if you intentionally evade taxes, make a false return, or are suspected of committing a fraudulent return, the IRS can open an investigation or assess your taxes at any stage. They can also collect taxes for any tax year, regardless of the time that has passed since you originally filed for taxes.
The statute of limitations can be extended if there is a substantial omission or a gross error in the amount of tax due. A gross error usually amounts to over 25% of the gross income they stated in their tax return. If there has been a gross error or substantial omission, the IRS statute may be extended to six years from the tax return filing date or the date it is deemed filed.
Fails to File a Tax Return
If a person fails to file their tax return and does not make any tax payment, there is no statute of limitations. This means that if you do not file a tax return, the IRS can assess your taxes or open an investigation into your taxes at any stage, without a time limit.
Wilful Attempt to Evade Tax
Like a fraudulent return and a failure to file tax, tax evasion removes the statute of limitations. This means that the IRS can collect taxes, assess your taxes, and initiate legal action against you at any time if there has been a wilful attempt to defeat or evade taxes.
What Is The Statute of Limitations For Income Tax in Texas? – FAQ
All tax returns must be submitted by April 15 of each year. However, if this date falls on a weekend or a legal holiday, the date is extended to the next business day. For example, in 2023, April 15th was a Saturday, so the date got extended to Monday the 17th of April.
If you need an extension of the due date, it is important to submit a request to the IRS within ample time. An experienced Texas tax attorney can help you with this process.
Once taxes have been assessed, the IRS has ten years for the collection of taxes, which is known as the Collection Statute Expiration Date (CSED). This ten-year statute begins from the assessment date, which is usually April 15, the tax due date, or if the IRS conducts an audit and determines the amount of tax debt owed.
Sometimes, the ten-year statute of limitations may be paused or extended. This usually happens when the taxpayer and the IRS enter into an agreement to pay back taxes, for example, an Offer in Compromise (OIC), an installment payment plan, or a Collection Due Process hearing.
There is a statute of limitations for tax crimes in Texas. The time limit varies depending on the type of crime in question. For example, the statute of limitations is six years for defrauding the United States government, attempting to defraud the government, willfully failing to pay tax, or willfully attempting to evade or defeat any tax payment.
Failing to file your tax return or filing a late return can lead to serious IRS penalties. For failing to file, you could receive a penalty of 5% of the unpaid tax amount for each month, with a maximum fine of 25% of the unpaid tax.
For failure to pay taxes, you could face a penalty of 0.5% of the unpaid tax amount for each month, with a maximum fine of 25% of the unpaid tax. The penalties for failing to file your taxes are more severe, which is why it is important to ensure that you file your taxes on time each year. An experienced tax lawyer can help you file your taxes if you are unsure of your liability.
Contact Ronald Arthur Stearns Sr. PLLC Today!
Trying to navigate tax laws and obligations in Texas can be quite difficult. As there are no state income taxes in Texas, income tax is handled by the IRS. When dealing with the IRS, you will need the help of an experienced attorney who can handle all matters on your behalf and ensure that your rights are protected.
If you owe taxes to the state or the federal government, are suspected of committing fraud, failed to file a tax return, or committed a gross error, you could face severe penalties and risk getting into serious trouble. The best thing to do in these situations is to contact Ronald Arthur Stearns Sr. PLLC.
Ronald Arthur Stearns Sr. PLLC has the experience and skills you need to protect your taxpayer’s rights in Texas. He has almost thirty years of litigation experience and has helped many clients in situations similar to yours. He understands the complexities of Texas tax laws and is ready to help you in any way that he can.
Dealing with the IRS and state tax authorities is complicated, and you will need strong legal representation to protect your best interests.
Call Ronald Arthur Stearns Sr. PLLC today at 210-853-2135 to schedule an initial consultation.