Understanding the IRS Collection Statute of Limitations
The Internal Revenue Service (IRS) has a limited time frame, known as the Collection Statute of Limitations (CSED), within which it can collect unpaid taxes, penalties, and interest from taxpayers. This time period generally spans 10 years from the date the tax was assessed. However, various circumstances and actions can impact the CSED, potentially extending or suspending the collection period.
Standard 10-Year Collection Period
Under IRC § 6502, the IRS typically has 10 years to collect tax debts from the date of assessment. The assessment date is either April 15th of the year following the tax due date or the date the tax return was filed, whichever is later. This means that the IRS can pursue collection actions, such as wage garnishment or property liens, within this 10-year window.
Exceptions and Extensions to the 10-Year Rule
Certain events or actions can extend or suspend the 10-year CSED, allowing the IRS to collect beyond the standard time frame. These include:
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Bankruptcy: Filing for bankruptcy suspends the CSED until the bankruptcy proceedings conclude, plus an additional six months.
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Offer in Compromise (OIC): Submitting an OIC, a request to settle the tax debt for less than the full amount owed, suspends the CSED during the review process and for an additional 30 days after rejection.
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Collection Due Process Hearing: Requesting a Collection Due Process (CDP) hearing suspends the CSED until a final determination is made, including any appeals.
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Innocent Spouse Relief: Filing for innocent spouse relief suspends the CSED until a waiver is filed or the 90-day period to petition the Tax Court expires.
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Combat Zone Service: Serving in a combat zone suspends the CSED for the duration of service, plus an additional 180 days.
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Military Service: Certain types of military service can suspend the CSED for the duration of service, plus an additional 270 days.
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Living Outside the United States: Residing outside the U.S. for six months or more can suspend the CSED for that period, potentially extending it by six months upon returning to the U.S.
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Substitute for Return: If the IRS files a substitute for return due to a taxpayer’s failure to file or fraudulent filing, the CSED starts from the date of assessment, with potential extensions for subsequent returns.
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Levy: The IRS may continue to receive payments from a levy on future income even if the CSED has expired.
Expiration of the CSED
Once the CSED expires, the IRS is generally prohibited from taking further collection actions. However, there are exceptions, such as cases involving fraud or willful evasion of taxes. Additionally, the IRS may notify taxpayers of any overpayments made after the CSED expired, and taxpayers may request refunds for such overpayments.
The IRS Collection Statute of Limitations generally provides a 10-year window for the IRS to collect unpaid tax debts. However, various circumstances and actions can extend or suspend this time period. Taxpayers should be aware of these exceptions and their potential impact on the CSED to ensure timely resolution of tax matters.
The IRS has 10 years to collect your taxes
FAQ
Does the IRS forgive debt after 10 years?
How many years can the IRS come back on you?
What happens if you don’t pay taxes for 10 years?
How long does IRS give you to pay back taxes?
How long does the IRS have to collect taxes?
The IRS generally has 10 years – from the date your tax was assessed – to collect the tax and any associated penalties and interest from you. This time period is called the Collection Statute Expiration Date (CSED). Your account can include multiple tax assessments, each with their own CSED. Examples may include:
How long does the IRS have to collect unpaid taxes?
If you owe money to the IRS, you might be wondering how much time the IRS has to collect it. The answer is that it depends, although generally speaking, there is a 10-year statute of limitations for the IRS to collect unpaid taxes. If they don’t collect your taxes within this timeframe, then you don’t have to pay your tax bill balance.
Can the IRS collect a 10 year old tax debt?
The Internal Revenue Service has a 10-year statute of limitations on tax collection. This means that the IRS cannot collect tax debts that are more than 10 years old. However, there are certain actions such as filing bankruptcy or applying for an offer in compromise that can pause the clock and extend the statute.
When can the IRS collect a tax debt?
The last day that the IRS can collect a tax debt is called the Collection Statute Expiration Date (CSED). Often, the IRS aggressively pursues taxpayers who owe taxes right before their CSEDs arrive. Why? After this date, the IRS cannot legally take you to federal court over the taxes. Therefore, the taxes owed essentially disappear.