What Is the IRS Statute of Limitations, or CSED?
The tax code only allows the IRS to take certain actions, such as collecting back taxes, for a specific number of years before the statute of limitations expires. You may have heard of the “10-year rule” related to tax collection – it’s important to understand how this rule affects your options and your rights.
The last day the IRS can collect back taxes is called the Collection Statute Expiration Date (CSED), and it’s 10 years from the date the tax was assessed. But certain actions stop the clock, and the IRS adds the extra time to your collection period.
You generally can’t just wait 10 years and hope nothing happens – but sometimes, it’s possible, and if you’re close to the CSED, you may be able to use it to your advantage.
If you need help understanding the CSED or paying off your tax debt, contact the tax professionals at BestTaxPro™ for expert guidance.
Key takeaways
- The Collection Statute Expiration Date (CSED) is 10 years after the tax assessment.
- Once the collection statute expires, the IRS can no longer legally collect the taxes owed.
- The collection period starts when the IRS assesses taxes after you file a return or when the agency adjusts your return through an audit or issues a substitute for return (SFR) for you.
- Certain events can pause or extend the CSED, including requesting an installment agreement or offer in compromise (OIC), filing for bankruptcy, or living outside the U.S.
- To find your CSED, get your tax transcript from your IRS online account, look at the Transactions section, and find the date under each action description.
- If you don’t file a tax return, the CSED never starts, and the IRS can collect indefinitely.
What Is the Collection Statute of Limitations on IRS Debt?
The collection period for taxes refers to how long the IRS can collect the taxes you owe. After that period ends, they can no longer collect. The statute of limitations gives the IRS 10 years to collect back taxes.
During that period, the IRS can take many different actions to try to get you to pay, including sending notices, issuing penalties, and filing tax liens. If those tactics don’t work, the agency may turn to more severe actions, like wage garnishment or property seizure.
The 10 years start whenever tax is assessed. For example:
- You filed a tax return, which resulted in a tax bill – the assessment date is when the IRS processes the return, not when you file or on the filing deadline.
- The IRS filed a substitute for return (SFR) on your behalf after you missed the filing deadline – the taxes are assessed 90 days after the Notice of Deficiency if you don’t respond or after you’ve exhausted your appeal options.
- You amended your tax return, which led to an additional assessment – again, the assessment occurs when the IRS processes the return.
- You went through an audit that led to an additional tax assessment.
- The IRS charged you with certain penalties and interest.
Then, the clock runs for 10 years, unless you experience a tolling event that pauses the clock and extends the collection period.
Events That Pause or Extend the CSED
The collection’s time clock may be paused and extended in a few ways, so it’s important to know when the IRS may have more time to collect. Actions like requesting an offer in compromise (OIC) or filing for bankruptcy, for example, will pause IRS collections, and the extra time will get added to the end, moving back your CSED.
Why does it work like this? When the clock is paused (aka suspended), the IRS can’t take any actions to collect your tax debt. But they get time back – that’s called an extension. For example, if the IRS can’t collect for six months due to a tolling event, they’ll move the CSED back by six months so they get the full 10 years to collect. Sometimes, the extension is a bit longer than the suspension.
| Tolling Events That Affect the IRS Collection Statute Expiration Date | |||
|---|---|---|---|
| Tolling Event | Does It Pause the CSED? | How long it suspends/pauses collections | How long it extends the collection period |
| Offer in Compromise (OIC) | Yes | Time OIC is under review, plus 30 days if the IRS rejects your offer | Same as the suspension period |
| Bankruptcy | Yes | From filing to the conclusion of case | Suspension period plus six months |
| Collection Due Process (CDP) Hearing | Yes | Date you request the CDP until case is resolved, including appeals | Suspension period, but CSED is moved 90 days out if fewer than 90 days remain after suspension |
| Installment Agreement Request | Yes | Time request is pending, plus 30 days if rejected | Same as the suspension period |
| Living Outside the U.S. | Yes | Any time you’re out of the country for at least 6 continuous months | At least six months after you return to the U.S. |
| Military Deferment | Yes | Duration of qualifying service, plus 270 days after the military notifies IRS | Same as the suspension period |
Sometimes, the IRS may ask you to extend the collection period – for example, if they want extra time to audit your return. You should always consult with a tax professional before agreeing or signing anything.
Situations When the 10-Year Clock Doesn’t Pause
The 10-year clock generally won’t be suspended if you stay in active, compliant status. For example, if you have an installment agreement in place, the CSED won’t pause unless you miss a payment and go into default.
Similarly, being on currently not collectible (CNC) status doesn’t pause the collections timer. If the IRS marks your account as CNC due to financial hardship, they can’t collect from you, but the 10-year clock will continue to run. If you get to the CSED, that debt will expire.
Where Can I Find My CSED?
The IRS stores official transcripts for every taxpayer. To find your CSED:
- Check online using the IRS’s online account system.
- Request a transcript by filing Form 4506-T, Request for Transcript of Return – send it to the IRS using the address on the form instructions.
- Call 800-908-9946 to request a transcript.
- Call 800-829-1040 for individuals or 800-829-4933 for businesses to ask for your CSED, without requesting a transcript.
- Ask a licensed tax professional to get your CSED.
If using a transcript, look for tax assessments under “Transactions.” Each transaction will show a CSED under its description. Transcripts have a lot of three-digit transaction codes – for example, code 150 represents your tax return being filed and processed – ask a tax expert for help interpreting this data.
Does the IRS Forgive Debt After the CSED?
After the CSED, or 10 years from the date of tax assessment, the IRS can no longer legally collect the tax debt. Your tax debt effectively expires on the CSED – that’s why it’s critical to understand this date.
Sometimes, it’s impossible to wait out the IRS. The agency often resorts to aggressive collections just before the CSED.
But in other situations, waiting until the CSED can work to your advantage. For example, if the CSED is in two or three months and you haven’t heard from the IRS, you may want to avoid taking any actions that will suspend collections and extend the CSED.
Depending on your finances, you may want to secure currently-not-collectible status until the CSED, or you may just want to lay low. An experienced tax professional can help you understand the best steps to take in this situation.
Unfiled Tax Returns and the CSED
Another important note about the statute of limitations for collections is that if you never file your tax return, the collection period never starts. That means the IRS has no limit on how far it can go back to assess taxes and collect them for years you didn’t file.
What to Do If Your CSED Is Far Away
You might be dealing with tax debt that has a CSED that’s still many years from now. Here are a few options to pursue when you can’t pay your tax debt:
Installment Agreement
One of the most common ways taxpayers get on top of their debt is through an installment agreement. These agreements allow you to pay off your balance via monthly payments instead of in one lump sum. You can apply online by logging in to your IRS account.
Offer in Compromise
An offer in compromise is a good option when you can’t afford your balance, even in monthly installments. The IRS will review your financial information and determine whether your “offer” is all they can reasonably expect to collect from you. If approved, you can settle your debt for less.
Currently Not Collectible Status
CNC status is granted to taxpayers who can show they’re experiencing some kind of financial hardship that restricts them from paying their balance. If you qualify, the IRS will mark your account as CNC and pause all collection activities. But it’s often only temporary, and you may have to start paying if your situation improves.
When to Seek Help from BestTaxPro™
Tax law is complicated, especially when you’re facing penalties and other IRS collection actions. If you’re trying to figure out your CSED, you want to dispute incorrect dates or numbers, or you want to get help dealing with tax debt, it’s best to seek the help of a tax expert.
Licensed tax professionals like Enrolled Agents (EAs) are federally authorized to represent you in front of the IRS – and if they’re a US Tax Court Practitioner (USTCP) like Joshua A. Webskowski, founder of BestTaxPro™, they can take your case all the way to Tax Court if needed.
Don’t deal with the IRS on your own – get guidance and representation from an experienced tax professional. At BestTaxPro™, we help Minnesota taxpayers deal with audits, liens, levies, unfiled returns, tax debt relief, and much more.
Contact BestTaxPro™ today to schedule a completely confidential consultation with a tax expert.
FAQs about the 10-Year Collection Period
No, all states have their own tax codes. The MN DOR has five years to collect tax debts, but if they file a state tax lien, they have 10 years from the lien recording date. The timeline may get extended if you file for bankruptcy. Additionally, the DOR can seize vendor payments to businesses that work for state agencies and tax refunds and apply them to your tax debt for 10 years.
Talk with a tax professional to learn about the implications of this decision in your situation. Extending the CSED gives the IRS more time to collect, but if you don’t agree to extend, you risk the auditor rushing through the process.
No, other actions have their own statute of limitations. For example, the IRS only has three years to assess additional taxes after you file a return – that’s called the assessment statute of limitations. It ends on the assessment statute expiration date (ASED), but it can be extended if you significantly understate your income or engage in tax fraud.
Either the CSED was extended due to a tolling event, or the IRS has miscalculated the CSED. Reach out to a tax professional to ensure your rights are protected.
Maybe, but not necessarily. Unfortunately, the IRS miscalculates a lot of CSEDs. For example, the agency may forget to stop tolling on time, or it may miscalculate an extension after a collection suspension. Reach out to a tax expert immediately if you think you’re seeing an incorrect CSED.
