Do You Pay Back Taxes After 10 Years?

The Internal Revenue Service (IRS) generally has 10 years to collect unpaid taxes, penalties, and interest. This 10-year period is known as the Collection Statute Expiration Date (CSED). After the CSED expires, the IRS can no longer pursue collection activities for the specified tax debt.

Exceptions to the 10-Year Rule

There are certain situations where the 10-year CSED may be extended or suspended. These situations include:

• Filing for bankruptcy: The CSED is suspended during the bankruptcy process and for an additional six months after the bankruptcy is discharged or dismissed.
• Filing an Offer in Compromise (OIC): The CSED is suspended while the IRS reviews the OIC application. If the OIC is rejected, the CSED is extended for an additional 30 days.
• Requesting a Collection Due Process Hearing: The CSED is suspended from the date the request is received until a final determination is made. If the taxpayer appeals the decision, the CSED remains suspended during the appeal process.
• Serving in a combat zone: The CSED is suspended for the period of military service plus an additional 180 days.
• Living outside the United States: The CSED is suspended for periods of continuous residency outside the U.S. for more than six months. The CSED may be extended for an additional six months upon returning to the U.S.
• Filing a Substitute for Return: If the IRS files a Substitute for Return due to the taxpayer’s failure to file or fraudulent filing, the 10-year CSED begins when the tax is assessed. However, if the taxpayer later files an accepted return showing a lower tax liability, the CSED for the original Substitute for Return remains the same.

What Happens After the CSED Expires?

Once the CSED expires, the IRS can no longer take any collection actions against the taxpayer for the specified tax debt. This means that the IRS cannot:

• File a lawsuit to collect the debt
• Levy or seize the taxpayer’s property
• Garnish the taxpayer’s wages
• Revoke the taxpayer’s passport

Important Considerations

• The CSED applies to each tax year separately. Therefore, even if the CSED has expired for one tax year, the IRS may still have the authority to collect taxes for other tax years.
• The taxpayer is responsible for tracking the CSED for each tax year. The IRS does not provide notifications when the CSED is approaching or has expired.
• If the taxpayer believes that the CSED has expired, they should contact the IRS to confirm and obtain documentation.

Seeking Professional Assistance

Taxpayers who are facing IRS collection actions or have concerns about the CSED may benefit from seeking professional assistance from a tax attorney or enrolled agent. These professionals can provide guidance on the taxpayer’s rights and options, negotiate with the IRS on their behalf, and help them resolve their tax debt.