How Long Can IRS Collect My Tax Debt on Back Taxes

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Michael Sullivan Fresh Start Tax Expert

 

How Long Does IRS Have To Collect My Tax Debt, Former IRS Agent Explains

The general rule, there is a ten year statute of limitations on IRS collections.

For 90% of all taxpayers the statute of limitation of 10 years will probably be the rule of thumb. But like everything there are exceptions. The only way to officially find out is to pull an IRS transcript.

The main the exceptions to the rule that extend the statute of limitations you will find below.

We have over 65 years of professional IRS work experience and are experts in determining the dates of assessment and the point in time in which IRS will forgive a tax debt.

 

This 10 year peroid begins from the date of the assessment.

 

THE IRS DATE OF ASSESSMENT

 

andIt is important to know the date of assessment begins when the IRS accepts your tax return in prices that on their computerized system.

Technically, the assessment is the statutorily required recording of the tax liability.

Section 6203.

Assessment is made by recording the taxpayer’s name, address, and tax liability.

The assessment date is the 23C date or the TC 150 date.

The 23C date is  the recording of assessment and other adjustments are made in summary manner on Form 23C and signed by a Service Center officer.

As a general rule, it can be anywhere from five days to six weeks from from the day you actually filed your tax return.

A lot is dependent whether you e-file or send it in manually by snail mail to the Internal Revenue Service.

To find out what your date of assessment is it will be necessary to pull an IRS tax transcript to officially verify the date.

Without an official IRS tax transcript is impossible to determine your assessment date. as clients a fresh start tax we can provide all this necessary information to you and help determine the official date of assessment to find out if the statute of limitations has expired on your IRS tax debt.

 

Exceptions to the ten-year statute of limitations.

Bankruptcy

The CSED, in a case under the Bankruptcy Code, is suspended while the Service is prohibited by reason of the case from collecting, and for six months thereafter.

Judgment/Litigation

Per IRC 6502(a), a court action brought against the taxpayer prior to the expiration of the collection statute extends the period to collect until the tax liability or judgment against the taxpayer is satisfied or becomes unenforceable.

Suit to Reduce Assessments to Judgment

In order for a suit to reduce the assessments to judgment and suspend the collection period, it must be filed prior to the CSED. The filing of a suit will suspend the collection statute during litigation

Collection Due Process (CDP)

The CSED is suspended from the date the Service receives a timely filed request for a CDP hearing to the date the taxpayer withdraws their request for a CDP hearing or the date the determination from Appeals becomes final, including any court appeals.

If 90 days is not remaining on the statute of limitations when the determination becomes final, the statute of limitations is extended to equal 90 days.

The collection statute is not extended for equivalency hearings.

Offer In Compromise

For offers pending prior to January 1, 2000, the CSED extension was affected by Treasury Regulation § 301.7122–1(f) (1960). Under this regulation the practice of the Service generally was to obtain from the taxpayer a waiver of the CSED for the period the offer in compromise was pending, while any installment of an accepted offer remained unpaid, and for one additional year thereafter.

For offers pending prior to January 1, 2000, a waiver of the CSED cannot extend the CSED beyond either December 31, 2002, or the original CSED, whichever is later, pursuant to section 3461(c)(2) of the IRS Restructuring and Reform Act of 1998 (RRA 98).

For offers pending on or made after December 31, 1999, suspensions of the running of the CSED in the offer in compromise context are governed by statute, specifically by IRC 6331(k)(1) and (3).

Under these provisions, the Service is prohibited from levying, and the CSED is suspended

While an offer is pending with the Service,

For 30 days immediately following rejection of the offer, and

For the period that a timely filed appeal of a rejection is being considered in Appeals.

CSED extensions for the period of time “while any installment remains unpaid” and “for one additional year thereafter” are eliminated.

Installment Agreements – Partial Payment Installment Agreements With Form 900, Tax Collection Waiver

Form 900, Tax Collection Waiver, is only executed in connection with the granting a partial payment installment agreement and only in certain situations.

Waiver Procedures for Partial Payment Installment Agreements. IRS policy dictates that a Form 900 be limited to no more than five years, plus up to one year to account for changes in the agreement. Note:Prior to July 2005, IRS policy permitted CSED extensions in conjunction with all installment agreements.

Effective March 9, 2002, the CSED is suspended during:

The time the proposed installment agreement is pending,

Thirty days following the rejection of a proposed installment agreement,

Thirty days following termination of an installment agreement, and,

Any appeal of the termination or rejection of the installment agreement.

Note:

This change is not retroactive. The suspension of the running of the collection statute is during the time that a levy is prohibited. The CSED is not suspended while an installment agreement is in effect.

Relief From Joint And Several Liability On Joint Returns/Innocent Spouse

Collection by levy or a proceeding in court against a spouse is suspended for the requesting spouse when he or she makes a qualifying request under IRC 6015(b), and/or IRC 6015(c).

Collection is suspended for claims filed under IRC 6015(f) if the liability was unpaid as of December 20, 2006, or the liability did not arise until after December 20, 2006.

The collection period is suspended from the filing of the claim until the earlier of the date a waiver is filed, or until the expiration of the 90 day period for petitioning the Tax Court, or if a Tax Court petition is filed, when the Tax Court decision becomes final, plus, in each instance, 60 days.

If a request for relief is made in response to collection due process procedures, there is also suspension of collection activity and the collection period provided for by IRC 6330(e) for the period during which any administrative hearings, and appeals therein, regarding the levy are pending.

The rules for suspension under IRC 6330 differ from IRC 6015.

In general, the latest suspension of collection and the collection period should control, which may require analyzing the suspension under both IRC 6015 and IRC 6330 where relief from joint and several liability is requested as part of an IRC 6330 hearing.

If the requesting spouse signs a waiver of the restrictions on collection, the suspension of the period of limitations on collection against the requesting spouse will terminate 60 days after the waiver is filed with the Service, limiting the CSED extension to the period from when the claim was filed to the time the waiver was signed, plus 60 days.

A request for reconsideration is not a qualified request for relief for purposes of Treasury Regulation §1.6015-1(h)(5), and does not trigger the restrictions on collection pursuant to section 6015(e)(1)(B) or the suspension of the collection period of limitation under section 6015(e)(2).

Taxpayer Living Outside the U.S.

The period of limitations on collection after assessment is suspended while the taxpayer is outside the United States if the absence is for a continuous period of at least six months per IRC 6503(c) .

To make certain that the Government has an opportunity to collect the tax after the taxpayer’s return, the period does not expire (where the taxpayer has been out of the country for six months or more) until six months after the taxpayer’s return to the country.

As the application of this provision can result in the CSED being suspended for a very long time, policies for the administration of this code section are now established.

We are former IRS agents in teaching instructors and can assist you with any statutory problems you may have on your case.

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