IRS Collection Statue Expiration Date (CSED)
“It is a basic concept of law that once a statute of limitation has passed, no action barred by the statute may take place.”
The IRS collections statute expiration date (CSED) is the date after which the IRS can no longer collect a tax debt.
When things are simple, the CSED is easily calculated as 10 years from the date of assessment.
The reason the statute of limitations is so important is that the amount of time remaining on the collection statute determines which solution the taxpayer should select to resolve their IRS tax liability.
This means that no matter how little the IRS has been able to collect on a tax debt assessed in April of 2007, they must cease collection on that debt in April of 2017.
What Extends Collection Statute Expiration
However, when you’re working with the IRS, things are rarely as simple as you’d like. There are a handful of events that can result in extending the CSED date (sometimes called “tolling events”).
Events that extend your CSED include:
- Submitting an offer in compromise
- Submitting an installment agreement Tax court hearing
Living in a foreign country for more than six months concurrently (including while on active combat duty) For the entire list, check the most recent version of the IRM.
Each tolling event extends the CSED differently. The key point about the statute of limitations is that certain actions on a client’s
part will toll, or freeze, the statute, preventing it from running.
Such actions include the filing of an Offer-in-Compromise, filing a CDP request, requesting an installment agreement, and filing for bankruptcy.
These actions prevent the IRS from taking collection action, and therefore stop the 10-year collection statute from running.
The rationale is that it would be unfair to allow the statute to run against the government while it is prevented from taking collection action.
The time remaining on the collection statute is therefore critical for the taxpayer to know to properly decide which of the
collection alternatives make the most sense to resolve the IRS tax issue.
Be sure to consult the most recent version of the IRM to see the full list of tolling events and how each affects the CSED.
It’s important to be aware of these tolling events so that you know how to help you avoid CSED extensions to the extent possible, but obviously some tolling events are unavoidable as you engage in the tax resolution process.
Just be sure that when you do something to extend the CSED, such as submit an installment agreement, that the extension is worth the desired outcome.
UNDERSTANDING COLLECTION STATUE EXPIRATION DATE
An IRS collection statute expiration date refers to the legal timeframe the IRS must collect a tax balance. The CSED often ends the Government’s right to further pursue tax liability, i.e. 10 years from the tax assessment date. For example, you waited until 2015 to file a return for 2013. The tax will be assessed in 2015 and the 10-year period begins to run on the same year. The expiration date is 2025.
In some cases, the CSED needs to be recalculated as IRS agents do not always recalculate them accurately. The National Taxpayer Advocate reports that miscalculated CSEDs are one of the most serious tax problems experienced by individual and business taxpayers. If a CSED is miscalculated beyond the actual CSED, the mistake may result in unlawful collection activity, which violates the taxpayer’s rights. Taxpayer Bill of Rights