ASSESSMENT AND COLLECTION OF U.S. TAXES FROM NON-U.S. TAXPAYERS

Sep 19, 2026

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Assessment and collection rules under U.S. Internal Revenue Code section 6501 are analyzed for situations involving non-U.S. taxpayers. The article explains the general three-year limitations period tied to filing a “return,” summarizes key exceptions including false or omitted returns, discusses extensions and indefinite periods under specific circumstances, and addresses how these limitations interact with foreign withholding mechanisms such as Forms 1042 and 1042-S. It further considers enforcement questions involving tax liens, levy, and assets with foreign situs when assessment and collection are constrained.

LanguageEnglish

CategoryGeneral

FormatPDF

Pages12

Reading Time4 min

AccessFree to download

Assessment and Collection Framework

Statute of Limitations on Assessment in General

Exceptions to the Three-Year Rule

Non-U.S. Taxpayer Applications

Withholding Returns and Return Definitions

Tax Liens and Levy on Foreign Situs Assets

User Name: Glenn Ross Date and Time: 10/24/2013 10:54 AM EDT Job Number: 5709019 Document(1) 1. ASSESSMENT AND COLLECTION OF U.S. TAXES FROM NON-U.S. TAXPAYERS. Client/matter: 888060-00001/weinstein Glenn Ross ASSESSMENT AND COLLECTION OF U.S. TAXES FROM NON-U.S. TAXPAY ERS. Tax Notes International Magazine JUNE 27, 2005 Copyright © 2005 Tax Analysts Cite: 38 Tax Notes Int’l 1171 Tax Notes Int’l, June 27, 2005, p. 1171 38 Tax Notes Int’l 1171 (June 27, 2005) See 2005 TNT 105-66 Department: ; News, Commentary, and Analysis; Practice Articles Section: ASSESSMENT AND COLLECTION OF U.S. TAXES FROM NON-U.S. TAXPAYERS. Length: 9180 words Author: Rubinger, Jeffrey L.; Weinstein, Andrew H. Holland & Knight LLP Geographic: ; United States References Subject Area: Tax system administration issues; Return preparation; Individual income taxation Code: (Section 6501--Limitations on Assessment) Body Release Date: JUNE 01, 2005 by Jeffrey L . Rubinger and Andrew H . Weinstein Jeffrey L. Rubinger is an associate with Holland & Knight LLP in Fort Lauderdale, Florida. Andrew H. Weinstein is a partner with Holland & Knight LLP in Miami. * * * * * The U.S. Supreme Court once described the policy be hind statutes of limitation as follows: [Congress has regarded it as] ill-advised to have an income tax system under which there would never come a day of ﬁnal settlement and which required both the taxpayer and the Government to stand ready forever and a day to produce vouchers, prove events, establish values and recall details of all that goes into an income tax contest . /1/ Section 6501(a) attempts to enforce that policy by providing as a general rule that the IRS has three years from the time a return is filed to assess ″any tax imposed by this title,″ which covers income, estate, gift, and excise taxes./2/ The statute of limitations on assessment may be extended to six years if the taxpayer omits more than 25 percent of its gross income from its return, or it maybe extended indefinitely if no return is filed./3/ A federal tax lien arises against all ″property or rights to property″ belonging to the taxpayer, if those taxes go unpaid./4/ That lien gives the IRS the ability to levy on all amounts that third parties owe to the taxpayer./5/ Although the operation of those rules is relatively straightforward in the purely domestic setting, their application is less clear when the taxpayer is a non-U.S. person. For example, does the filing of IRS Forms 1042,″Annual Withholding Tax Return for U.S. Source Income of Foreign Persons,″ and 1042-S, ″Foreign Person’s U.S. Source Income Subject to Withholding,″ by a withholding agent constitute the filing of a ″return″ of the foreign person and therefore start the running of the general three-year statute of limitations on assessment regarding that foreign person? Does the statute of limitations on Glenn Ross Page 2 of 11 ASSESSMENT AND COLLECTION OF U.S. TAXES FROM NON-U.S. TAXPAYERS. assessment remain open for assessing tax against a withholding agent when no withholding return (Form 1042) has been filed, even though the non-U.S. payee’s income tax liability cannot be assessed or collected because of the expiration of the statute of limitations on assessment or collection? Also, if the IRS does assess additional taxes against a foreign taxpayer that owns only foreign-situs assets, does the IRS have the ability to levy on those foreignsitus assets? This article will address those and other issues that arise in connection with attempts to assess and collect U.S. taxes from non-U.S. taxpayers./6/ Statute of Limitations on Assessment in General As noted above, section 6501(a) provides the general rule that ″the amount of any tax imposed by this title shall be assessed within 3 years after the return was filed.″ If the IRS fails to assess the tax within three years, it is not only prohibited from collecting the tax administratively by

FAQs

What does section 6501(a) generally require for assessing U.S. taxes?

It provides that the IRS must assess the tax within three years after the return is filed.

When can the statute of limitations on assessment be extended or become indefinite?

The limitations period may be extended to six years if more than 25% of gross income is omitted, and it may become indefinite for false returns, willful attempts to evade tax, or when no return is filed.

How does the article frame issues for non-U.S. persons regarding withholding forms and assessment timing?

It questions whether filing IRS Forms 1042 and 1042-S by a withholding agent counts as a return for the foreign person and how assessment timelines apply when withholding returns are not filed.

Sep 19, 2026

Upload by Jasmine