Backup withholding tax is applied for income that doesn’t normally require withholding based on the status of the taxpayer. The arrangement ensures that the IRS will receive the taxes owed on the income. However, backup withholding tax only applies in very specific circumstances.
An IRS statute of limitations defines the period allowed for legal actions to be taken against you for unpaid debt. Yes, it may sound too good to be true. However, the reality is that getting to the end of a statute of limitations isn’t exactly easy. Simply “waiting out” the IRS isn’t necessarily a good idea because the IRS can and will use every legal collection tactic and penalty available while your debt is still legally collectible. However, there are ways to utilize your statute of limitations as a part of a tax-relief strategy if certain conditions are in play.