Every tax assessment has a collection statute (CSED) expiration date. Section 6502 of the Internal Revenue Code states that the duration of the collection period after the evaluation of a tax liability is 10 years. As a general rule, there is a ten-year statute of limitations for IRS collections. This means that the IRS can try to collect your unpaid taxes for up to ten years from the date they were evaluated.
With some important exceptions, after the ten years have elapsed, the IRS must stop its collection efforts. Every year, the statute of limitations expires for thousands of taxpayers who owe money to the IRS. In general, the IRS has 10 years after the evaluation date to collect back taxes and tax-related fees, although there are some exceptions. This 10-year limit is known as the expiration date of the Collection Act (CSED) and frees tens of thousands of Americans from their tax obligations every year.
Simply put, the statute of limitations for federal tax debt is 10 years from the date of the tax assessment. This means that the IRS must forgive the tax debt after 10 years. However, there are a few things to keep in mind. Generally speaking, the Internal Revenue Service has a maximum of ten years to collect unpaid taxes.
After that time has elapsed, the obligation is completely erased and removed from the taxpayer's account. This is considered “amortization”. The ten-year period is recognized as the limitation period in tax balances or the expiration date of the collection statute, commonly referred to as CSED. Taxpayers cannot easily identify this limitation because it is not in the best interest of the IRS to cancel a liability.
Your ten-year term begins when you file your tax returns and owe taxes. The IRS has three years from the date you file a tax return to assess any additional taxes that could result in an IRS liability. They don't make the ten-year limit comprehensible to taxpayers for fear that a taxpayer will simply wait for time to pass. If you're choosing to delay collection and “wait until the deadline”, then you'll want to be prepared for the Internal Revenue Service's collection tactics to become severe.
When the time for your CSED approaches, the Internal Revenue Service will adopt more aggressive measures. Aggressive actions may include filing tax liens or issuing a tax lien on your bank accounts or your salaries. The quickest tactic to prevent collections from being made is to accept payment plans established by the Internal Revenue Service, also known as an installment agreement. Before you decide to take any matter into your own hands with the Internal Revenue Service, you should consult tax professionals who are experts trained in negotiating with the IRS regarding tax liability and in providing tax relief.
Previously, Karen was director of the Department of Tax Education and Research and Director of Communications at TaxAudit. As with most things tax-related, it can be a little difficult to determine when the ten-year collection period for your tax debt ends. If your statute of limitations period is coming to an end and you still owe a significant amount of money to the IRS, IRS staff can offer you an installment agreement with attractive terms so that you agree to extend the collection period. Regardless of the circumstances, if the return is late or if the taxpayer fails to pay the full amount of taxes due, additional interest and penalties may apply.
It is highly recommended that you contact tax professionals who have experience in helping people negotiate tax relief with the IRS, as they can better advise you on when your CSED is likely to receive their history and if you should contact the IRS, given your current circumstances and position, or if you can wait for it to end. This means that the statute of limitations period is suspended if you file for bankruptcy and the bankruptcy court issues an automatic stay that prevents the IRS from taking collection action against you; the suspension lasts the period of the bankruptcy case plus six months. In short, every time the IRS can't request your payments from you, it stops counting down the time limit for your debt. First of all, there is no way to reduce the IRS statute of limitations period by filing your return before April 15.
The best plan of action might be an affordable installment plan, an offer that promises to pay less than the amount you owe, or, in case of serious difficulties, request full debt forgiveness. When the ten years pass, the IRS must write off the debt as an uncollectible debt, essentially forgiving it. After this 10-year period or statute of limitations has expired, the IRS can no longer attempt to collect the balance due by the IRS. Bankruptcy proceedings alone can take a year, and after that, the IRS waits an additional six months after the process is finished to begin its collection efforts (and, consequently, the collection timer).
Trying to find the best approach to dealing with tax debt can be stressful and confusing, but a TaxAudit tax professional can help you determine the best strategy for resolving it. The date of your CSED may exceed 10 years from the initial evaluation if the IRS has to suspend collections at any time, which can happen if the IRS is not legally authorized to initiate collection actions against you for any reason. Depending on your communications with the IRS over the past few years, as well as your financial situation and other possible actions that could suspend the 10-year period, the expiration date of your collection statute (CSED) may be later than you originally expected. .