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.
This 10 year period begins from the date of the assessment.
It’ s important to know the date of assessment begins when the IRS accepts your tax return in prices that on their computerized system.
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 rule apply.
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.
Signing of a Tax Waiver 900 form
Subject to some important exceptions, once the ten years are up, the IRS has to stop its collection efforts. Every year, the statute of limitations expires for thousands of taxpayers who owe the IRS money.
If your Collection Statute Expiration Date (CSED) is near, the IRS may act aggressively to get you to pay as much as possible before the deadline or agree to extend it.
When Does the Limitations Period Begin?
The ten-year limitations period begins to run on the date of the tax assessment. This is the date an IRS processes return on the computerized system.
The date on this bill starts the ten year limitations period.
If you did not file a tax return, the IRS can create a substitute return for you and make a deficiency assessment, which starts the ten year period. IRS does this by virtue of code section 6020b.
Thus, not filing a return and hiding for ten years accomplishes nothing.
Suspension of Limitations Period
The ten-year collection period can end up lasting more than ten years because it can be suspended for one or more time periods.
The time during which the statute of limitations is suspended is not counted toward ten-year deadline.
This means that the limitations period is suspended if you file for bankruptcy and the bankruptcy court issues an automatic stay preventing the IRS from taking collection action against you–the suspension lasts for the period of the bankruptcy case plus six months.
The period is also suspended while the IRS is considering your request for an installment agreement, offer in compromise, or request for innocent spouse relief, or while you live outside the U.S. continuously for at least six months.
The IRS can also extend the ten-year period by suing you in federal court; however, it rarely does this.
Voluntarily Extending the Limitations Period
The ten-year limitations period is not absolute. It can be extended if you voluntarily agree to do so.
Back in the bad old dates (before 1998), the IRS used to put enormous pressure on taxpayers to agree to extend the limitations period beyond ten years–such extensions often lasted for ten or even twenty years.
If the taxpayer refused to “voluntarily” agree to the extension, the IRS would make threats. as a former IRS agent I had many cases in which the statute were going to expire and we have to go up and threaten the taxpayer with the filing of a bank levy or wage garnishment levy to make sure the extension was signed by the taxpayer. IRS agents to lose their jobs if waivers and statutes blow. Fortunately, this is no longer allowed.
However, if you enter into an installment agreement with the IRS allowing for partial payment of the amount due, you’ll likely have to sign a form waiving the ten-year limitations period.
But this extension can be no more than six years. If your limitations period is nearing its end and you still owe the IRS substantial money, IRS personnel may offer you an installment agreement with attractive terms in order to get you to agree to extend the collection deadline. Consider carefully before agreeing to any such extension.
You may be better off refusing to extend the deadline and let the IRS collect whatever it can before it runs out.
if you are by the end of your statutory period of time and are contacted by the Internal Revenue Service is best to call a true tax professional. Call us today for a free initial tax consultation. We’re true IRS tax experts.Since 1982.
IRS Tax Debt + When Does the Tax Debt End + Statute Of Limitations
