Do federal tax liens expire?
The answer is yes! The Collection Statute Expiration Date (CSED) marks the end of the collection period, the time period established by law for the IRS to collect taxes. The CSED is normally ten years from the date of the assessment.
The Collection Statute Expires After 10 Years.
The collection period, which refers to the time period allowed by law for the IRS to collect taxes, expires on the Collection Statute Expiration Date (CSED). The CSED is typically ten years from the date of the assessment..
Tax assessments that have a specific Collection Statute Expiration Date include, but are not restricted to:
- Original tax assessments from voluntarily filed returns
- Tax assessments arising from amended return filings
- Substitute for Return tax assessments made by the IRS
- Audit assessments
- Civil penalty assessments
The IRS’s Time to Collect can be Suspended and/or Extended.
Certain circumstances have the potential to delay or lengthen the original ten-year CSED.
In general, when the IRS is unable to collect tax, the CSED or Collection Statute Expiration Date is suspended. The term it is suspended for extends the time the IRS has to collect. In other words, you have a maximum of ten years to collect after the first ten years. Although there are rare exceptions, the IRS typically refrains from taking levy action while the collection period is stopped.
In contrast, the collection period is tolled when the IRS is allowed by law to add additional time to the initial ten-year collection period. The IRS is allowed to continue collecting when the collection period is extended.
Typical Events That May Have an Impact on the CSED
The CSED is impacted by a number of statutes. The completion of the collection period may be tolled by more than one action. The time for multiple events is not added more than once where one event may overlap another one because overlapping conditions take place simultaneously.
The initial ten-year collection period is postponed or put on hold during the time that you are filing an Installment Agreement (IA). Until an IA may be reviewed, established, or the request is withdrawn or rejected, an IA request is usually in the pending status.
The collection period is suspended for 30 days if the proposed IA is denied. Similar to this, the running of the collection period is halted for 30 days if you fall behind on your IA payments and the IRS decides to terminate the IA.
Last but not least, the collection period is suspended from the time it begins to run until the day the appealed decision becomes final if you use your right to appeal either an IA rejection or termination. Please see Topic 202.
The running of the collection period is stopped while your bankruptcy is still pending if you file for bankruptcy. A bankruptcy is often considered pending from the moment a petition is filed until it is discharged, dismissed, or closed. Upon the conclusion of the bankruptcy, the collecting time is further extended for a further 6 months. Check out Publication 908.
The collection period is suspended if you submit an Offer in Compromise (OIC), from the time it is pending to the time it is accepted, returned, withdrew, or refused. If your Offer is turned down, the collection period will be postponed for an additional 30 days and for the duration of the appeal process if you decide to appeal the denial. Please see Topic 204.
When the IRS receives a request for a Collection Due Process (CDP) hearing, the collection period is put on hold until either the taxpayer withdraws the request or the CDP determination is final, including any court appeals. The collecting period is extended to 90 days from the date of the final determination if there are less than 90 days until the CSED at the time the determination becomes final. Please consult Publication 1660.
If you submit an innocent spouse claim, only the running of the requesting spouse's collection period is suspended from the date the innocent spouse claim was submitted until the earlier of the dates a waiver is submitted, the 90-day petitioning tax court deadline expires, or, if tax court is requested, the date the tax court decision becomes final, plus, in each case, the collection period is extended by an additional 60 days. Observe Topic 205.
The IRS is prohibited from starting an administrative or judicial collection process for the assessed debt once a particular collection period has passed.
REQUEST A FREE CONSULTATION