Received tax bill from 2015… do I still have to pay?

General
1

Hi everyone,

I just got a notice saying I owe about $6,000 in back taxes from 2015. This isn’t from the IRS but from a state I used to live in. The actual tax owed is around $700, and the rest is all interest and fees that built up over time.

I did file my taxes that year, and after checking, I did make a mistake that caused this unpaid amount. I’m just frustrated because I never got a notice before, so these penalties have been adding up without me knowing.

Can they still come after me for this almost 9 years later? I thought the IRS usually doesn’t look back this far. I’ll pay if I have no other option, but it feels unreasonable. Any advice?

2

Which state sent you the bill?

3

Hari said:
Which state sent you the bill?

It’s Rhode Island.

4

Jensen said:

Hari said:
Which state sent you the bill?

It’s Rhode Island.

You mentioned that the IRS generally doesn’t go back this far.

That’s not quite right. The IRS has a ten-year limit for collecting after assessing the tax. So if you filed in 2016, the IRS can still collect until 2026.

Rhode Island seems to have a similar ten-year rule: http://webserver.rilin.state.ri.us/Statutes/title44/44-30/44-VI/44-30-83.htm

5

@Hari
That’s for collection only, meaning the bill was issued within the allowed time frame (usually 3 years, or 6 if a large amount was omitted). If they actually just assessed this tax now, they wouldn’t be able to go back this far without specific reasons.

6

@Hari
It’s crazy that a bill this high built up over just $700 in taxes. There should be a cap on how much interest and fees can grow, maybe a limit like 3 years, even if they have 10 years to collect. Accumulating this much without a single notice seems unfair.

7

@Fable
Not sure about RI, but federal penalties do have caps. Failure to File and Failure to Pay caps are 22.5% and 25%, but interest has no cap.

8

Hari said:
@Fable
Not sure about RI, but federal penalties do have caps. Failure to File and Failure to Pay caps are 22.5% and 25%, but interest has no cap.

I feel like there should be an incentive for them to notify sooner. If someone honestly filed but missed something, it doesn’t feel fair for the liability to keep growing for 10 years without a heads-up.

Putting a limit on interest after a certain point would still discourage under-reporting but wouldn’t lead to such big amounts piling up over time.

9

@Fable
It’s up to taxpayers to report their income and make sure they pay what’s owed. The resources are out there to help with that.

10

Gray said:
@Fable
It’s up to taxpayers to report their income and make sure they pay what’s owed. The resources are out there to help with that.

Completely missed the point.

11

@Hari
Looks like I’ll just have to pay it. If it expired at the end of 2024, I’d maybe consider waiting it out, but with a full year left, I guess I have no choice.

It just doesn’t sit right that I’m only hearing about it now. I’ve learned a lot about taxes over the years and use a professional now to avoid this sort of issue.

12

Just checked and Rhode Island interest rates are super high! Didn’t check on the penalties, though.

13

Maybe look into an offer in compromise. They might agree to a lower amount.

14

Kai said:
Maybe look into an offer in compromise. They might agree to a lower amount.

Thanks for the idea. I’ll check it out.

15

Rhode Island has 3 years from the due date (if you filed) to assess extra tax. They can’t go back further unless there was fraud involved.

I’d contact them and ask when they assessed the extra tax and check on the statute of limitations.

16

Did you move during this period?

If so, did you update your address with Rhode Island’s tax agency?

17

Shan said:
Did you move during this period?

If so, did you update your address with Rhode Island’s tax agency?

Yes, I moved but didn’t update Rhode Island. I’ve been at my current address since 2018 though. It’s odd they just now found me.

I asked them about it, and they admitted no notices were sent to any of my addresses before last week.