The IRS generally has ten years to collect taxes. The ten-year period starts when the tax is assessed.
If you filed an accurate tax return, the tax is assessed when you file. If the IRS audits your return and assesses additional tax or files a substitute return on your behalf, then the date these actions occur will be the start date for the ten-year collection period.
Determining Your Collection Expiration Statute Date (CSED)
You can find out your CSED by requesting your tax transcripts from the IRS. You may have several different CSEDs for different tax years.
If your CSED has passed, then the IRS has lost its ability to enforce tax collection. Essentially, the IRS will have to write the debt off.
If your CSED is nearing, expect the IRS to be aggressive trying to collect the taxes. If you have multiple CSEDs, the IRS will apply payments to the earliest CSED to maximize their collection potential.
Actions That Extend the CSED
Several different actions can pause the collections statute clock, including the following:
- Submitting an installment agreement
- Submitting an Offer in Compromise
- Requesting a Collection Due Process (CDP) hearing
- Requesting Innocent Spouse relief
- Living abroad for a continuous period of at least six months
In many of these cases, the IRS is temporarily prevented from taking collection actions, such as a bank account levy. In return for this favor, you give the IRS more time to collect.
For example, if you submit an installment agreement, the collections clock stops while the IRS considers your request. If your request is denied, the clock starts 30 days after the denial or any appeals are resolved. The whole period that the clock was stopped is then tacked on to the collection period, extending your CSED.
Because of these extensions, the IRS can have much more than 10 years to collect back taxes. If you filed a 2010 tax return by tax day in 2011, the IRS could audit your return for three years. They can assess tax before April 15, 2014. They then have 10 years from that date to collect.
But if you later file for bankruptcy and request a CDP hearing, additional time will be added to this ten year period. The IRS could still be trying to collect tax debt from 2010 return well into the 2020s.
Know Your CSEDs
It’s important to know your CSEDs to determine if the IRS has run out of time to collect from you. A tax attorney can help you request this information.
Prevent IRS collection actions by calling The Gartzman Law Firm at (770) 939-7710. We can help stop bank account levies and wage garnishments before they happen and find a creative solution to your tax problems.