Many people believe that the IRS is a 10 year statute of limitations on collection cases but in reality that is not true. admittedly about 90% of all cases do expire after the 10 years but is everything in life there are extenuating circumstances that extend the IRS 10 year statute of limitation.
I have taken this section under the internal revenue manual section 5 which deals with the collection division.. The list of notable items that extends the IRS collection statute of limitations. if you have any questions call me I am a former IRS agent teaching instructor and I can help you deal with some of the issues that arise because of the ten-year statute of limitation circumstances.
5.1.19.3.1 (05-19-2016)
Bankruptcy
In a case under the Bankruptcy Code, the CSED is suspended while the Service is prohibited from collecting, and for six months thereafter. For more information see IRC 6503(h)(2). Thus, the CSED is generally suspended while the automatic stay imposed by the bankruptcy is in effect. Even if the suspension of the CSED under IRC 6503(h) no longer applies, the CSED still may be suspended when substantially all the debtor’s assets remain in the custody or control of the bankruptcy court under IRC 6503(b).
5.1.19.3.2 (04-26-2018)
Judgment/Litigation
Per IRC 6502(a) a court action brought against the taxpayer for the collection of tax 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.
5.1.19.3.2.2 (05-19-2016)
Suit to Reduce Assessments to Judgment
A suit to reduce the assessments to judgment must be filed prior to the expiration of the CSED to suspend the collection period. The filing of a suit will suspend the collection statute during litigation. For more information see IRM 5.17.4.7, Suit to Reduce Assessments to Judgment.
5.1.19.3.3 (04-26-2018)
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. See IRC 6330 (e)(1).
If less than 90 days of the statute of limitations remains when the determination becomes final, the statute of limitations is extended to equal 90 days. The collection statute is not extended for equivalency hearings. See IRC 6330 (e)(1).
5.1.19.3.4 (04-26-2018)
Offer In Compromise
For requests to extend the CSED made prior to January 1, 2000 in connection with a pending offer 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 requests to extend the CSED made prior to January 1, 2000 in connection with a pending offer that extended the CSED beyond the original 10-year collection statute, a waiver of the CSED cannot extend the CSED beyond either December 31, 2002, or the original CSED, whichever is later,see section 3461(c)(2) (A) and (B) of the IRS Restructuring and Reform Act of 1998 .
For offers pending on or made after December 31, 1999, and before December 21, 2000, the collection statute of limitations is suspended by IRC 6331(k)(1) and (3) while the Service is prohibited from levying.
The Service is prohibited from levying and the CSED is suspended under the following provisions:
While an offer is pending with the Service,
For 30 days immediately following rejection of the offer for the taxpayer to appeal the rejection, and
If an appeal is requested within the 30 days, during the period while the 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. No days are suspended before December 31, 1999, or after December 20, 2000.
Note:
If a request for CSED extension was made on December 31, 1999 in connection with a pending OIC, the statute is extended concurrently under both RRA 98 section 3461(c)(2) and section 6331(k)(1) and (3).
The Community Renewal Tax Relief Act of 2000, effective December 21, 2000, amended IRC 6331(k)(3) and eliminated the suspension of the CSED while offers (and installment agreements) were pending.
The Job Creation and Workers Assistance Act of 2002, effective March 9, 2002, amended IRC 6331(k)(3) and reinstated the same CSED suspensions as described above with respect to both offers and installment agreements while levy is prohibited. This amendment suspends the CSED for the number of days on or after March 9 that an offer is pending, during the 30 days to appeal the rejection.
Example:
An offer is rejected on March 4, 2002. March 4, 5, 6, 7 and 8 would not be suspended. The 30-day period for appealing the rejection starts on March 5 and ends on April 3. Of that 30-day period, the collection statute would be suspended starting on March 9 through and including April 3. If the taxpayer requests an appeal on or before April 3, then the collection statute will be suspended until Appeals sends the taxpayer a letter giving its decision.
Cases may be encountered where prior rules were in effect. For more information see IRM 5.8.10.7, Effect of Previous Offers on Collection Statute.
If only one party to a joint assessment files an OIC, then the CSED is suspended just for that person. The appropriate CSED suspension code must be input on IDRS to identify the specific taxpayer for which the offer applies. They are described below:
