The 10 Year Statute of Limitations on Collection of an IRS Debt

The 10 Year Statute of Limitations on Collection of an IRS Debt

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The IRS has ten (10) years from the date of a tax assessment to collect a debt from the taxpayer.

The date the collection statute expires is called the Collection Statute Expiration Date or CSED.

When this date passes, the IRS is barred from attempting to collect your tax debt unless you waive the enforcement of the statute.

When Does the Collection Statute Start to Run?

The statute starts on the day an IRS assessment is made.

Generally, the dates of assessment are as follows:

  • Filed tax returns – The date you mailed the tax return plus six weeks.
  • Audit Adjustments (agreed) – The date you signed the auditor’s report plus three weeks.
  • Audit Adjustments (unagreed) – The date the appeals process and the tax court process (if any) is completed and the tax court judge has issued his or her ruling.

What Will Cause the Collection Statute to be Extended?

The Collection Statute can be extended (tolled) by one or more of the following acts or situations:

  • The filing of a bankruptcy petition - The statute is extended for duration of the bankruptcy proceedings.
  • The filing of an Offer in Compromise - The statute is extended for duration of the Offer or one year, whichever is greater.
  • The filing of requests for relief – The statute is extended when a taxpayer files for a Collection Due Process hearing, Innocent Spouse Relief and any other form of relief that requires the IRS to suspend collection enforcement while it reviews the validity of the underlying assessment.
  • The signing of a waiver extending the statute - The statute is extended to date indicated in signed waiver. Never sign a statute extension without first consulting your tax advisor.
  • The taxpayer is out of IRS jurisdiction – The statute is extended for duration taxpayer was out of IRS jurisdiction.

Our Advice to Taxpayers

In formulating a strategy for dealing with the IRS and in evaluating your options, it is critical that we accurately determine the date the collection statute expires.

The IRS has incorrectly calculated the CSED on many prior occasions. Consequently, you should never rely solely on an IRS agent’s statement of the CSED.

If you owe back taxes for several years, consult with an experienced tax professional before providing any financial information to the IRS collection office.

As you might expect, the IRS doesn’t like it when the collection statute expires because that means it won’t get paid.

This is why the IRS intensifies enforced collection actions as the CSED approaches.

And some IRS agents will even try to trick the taxpayer into signing a statute of limitations waiver.

This is why we strongly recommend that taxpayers do not represent themselves before the IRS collection division.

About Peter Pappas

Peter is a tax attorney and certified public acccountant with over 20 years experience helping taxpayers resolve their IRS and state tax problems.

He has represented thousands of taxpayers who have been experiencing difficulty dealing with the Internal Revenue Service or State tax officials.

He is a member of the American Association of Attorney-Certified Public Accountants, the Florida Bar Association and The Florida Institute of Certified Public Accountants and is admitted to practice before the United States Tax Court, the United States Supreme Court, U.S. District Courts - Middle District of Florida

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Comments

  1. This is a nice reminder for folks. Taxpayers don’t realize that there is a 10 year statute of limitations on tax debt. But most people will have there bank accounts levied and tax liens filed long before this.

  2. This statute is often overlooked…unfortunately most folks will not be able to wait it out as the IRS will most likely levy prior to this. However, they may be able to get non-collectible status that will help.

  3. The Wall Street Journal said this week that the 2008 Farm Bill extends the Fed’s the right to collect past 10 years. Is this true? For infinity?

  4. Win,

    Please provide the link and I will check it out for you.

  5. Lee Brown says:

    Can you clarify: Is California exempt from the 10 year statute to collect? There are taxes owing from 1992 through 2001. No returns were filed; the taxes were assessed and interest started accruing from 4/15 of the following year of each year. Any other info than what has been posted would appreciated. On 3/30/2010 the bank accounts were levied. Also, what does CSED mean?? Thank you in advance for any clarification. Lee Brown

  6. Lee,

    I am unaware of any exemption for Californians.

    CSED stands for “Collection Statute Expiration Date.”

  7. Looks like if you can stall the IRS long enough and avoid any liens, you may be able to let the statute expire. Too bad not many people are aware of this. At the end of the day, if you owe the tax then you should pay it.

  8. Accounting Leads,

    Be careful about this strategy. As tax advisors we are not permitted to pursue a course of action that is designed merely to delay the IRS’s collection of the debt.

  9. Just found out old taxes due from 1999, filed April 14th, 2000. Lien for these Marxh 2004.
    Filed bankruptcy in 2001.

    Is it the 10 years limitation from April 14th, 2000 plus the 4 months during the bankruptcy so that 10 years and 4 months from April 14th 2000 the debt is now uncollectible?

    OR

    It is from the date of the lien in 2004?

    OR

    something else?

    I would appreciate a response.

    Thank you all.

    This old tax debt was a total surprise to me when the lien came up during a home refinance.

    :-)

  10. Help,

    Collection statute expiration dates (CSED) can be difficult to calculate. The only way to get the exact CSED is to call the IRS, which I am sure you don’t want to do. Did you ever file an offer in compromise? Have you been out of the country for any significant period of time? These things, also, can extend the CSED.

    Good luck.

  11. We just found out that I have a 15 year old tax debt that I never knew about. Federal & State income taxes. It was found only on my credit report, found while trying to purchase new home, it is not on my huabands report. Is there a statute of limitations on something this old? I am in southern california, & was 15 years ago.
    Thank You.

  12. Cricket B,

    State statutes are different than federal statutes. I would need a lot more information before I can advise you on this matter. I suggest you call me or hire a local tax attorney to assist you.

    Good luck.

  13. Hi,

    I hadn’t filed taxes for a while and now I’ve done them all from 2005-2010. I owe for for each yr and IRS for 2005-2008. My W-4.

    I feel behind because I did too many exemptions and when it was time to pay for 2004 I was already in a bin and just delayed it for yrs.

    When I got them done by a so-called CPA she didn’t bring any of this up to me. She tried pressuring me into a OIC but I couldnt pay that full amount. Ive set up a pay plan for IRS and tried for State but they want more a month than I can pay. So I just started sending anything in with hopes that they won’t do anything harsh. They did it anyway and put a lien on me.

    I just found out about CSED, can someone tell me how do I go about it with this in mind? Just a reminder, I filed 05-2010 in Jan 2011. Does the CSED start this yr or the tax yr?

    Any advice is most appreciated…thank you!

  14. My husband and I just recently learned that his daughter and son-in-law have not filed a federal tax return in 20 years. They made a error on their 1992 returb resulting in a lien being filed against them. This lien expired and was not renewed. They are both in their 40’s and want to buy a house. They want to get back on track with filing taxes but they are concerned on how far back the irs will go and hold them responsible for unpaid taxes, interest, penalties and failure to pay charges?

  15. Michael Cash says:

    IRS policy is to solicit only six years of delinquent income tax returns except in cases of fraud. Negligence is not fraud.

  16. Michael,

    Not entirely true. If you have reported income that you failed to report on a return that is older than six years and you have not filed, the IRS will prepare an Substitute Return for you. Also, the six year policy is not a law whereas the statue of limitations on collections is.

    True, negligence is not fraud.

  17. I have been contacted by the California Franchise Tax Board regarding $4600. I owe for income earned in 1992. This amount has grown to $16,444.06. I filed for this year by April 1993, but I have no proof. California only requires four years retention. I have been on OPM disability retirement for ten years. I have not been able to work at all for the last four years. I live in Florida. I have never paid on this or signed anything. Can they garnish my disability?

  18. What if the IRS has kept all your return money the last 10 years to pay on old tax debt. Would this extend the CSED or is the expiration date still form the date tax was assessed? Also my husband did do an installment agreement prob 8 years ago but defaulted, would this make any difference. THANKS

  19. I am in installment agreement with the IRS. All of my returns were filed on time but a portion of my debt that I am paying on is from 2003 and 2004 due on April 15th, 2004 and 2005 respectively. Will that debt drop off of my balance due when the 10 years is up. Thank you for your help.