IRS Collection Time Limit

Uncle Sam likes to keep quiet the fact that he must operate under deadlines when it comes to collecting taxes.  But in fact the Internal Revenue Code contains provisions to avoid a lifetime reprimand for the taxpayer who unwittingly errs when reporting tax liability. Generally, there’s a 10-year window of opportunity for the IRS to collect.

But before you start counting down the minutes until Uncle Sam stops demanding payment on your past-due taxes, get acquainted with the details of the statute of limitations on tax debt collection, known as the Collection Statute Expiration Date (“CSED”).

  • The 10-year timeframe for collections begins on the day your tax is assessed by the IRS.  Don’t assume that the CSED runs 10 years to the day you file a return.  True, the IRS usually finalizes your debt based on the balance due of a tax return, but the IRS can also assess additional principal, penalties, and interest after an audit.  Generally, the IRS can audit your return up to 3 years after you file it.
  • The IRS can reach an agreement with you concerning the amount you owe.  The CSED is set based on the date of the final IRS determination of your tax liability.
  • Certain actions can result in an extension of the CSED.  For instance, if you file for bankruptcy, request an Offer in Compromise, or leave the U.S. for a long period, the CSED will be pushed forward.
  • Sometimes the CSED will be continued because the taxpayer is in the midst of negotiating the total amount owed or the release of liens and levies.  In this case, the taxpayer may authorize the IRS to extend the CSED until the negotiations reach resolution.
  • And if you’ve been convicted of tax fraud, there is no limitation for collection of those taxes.

If you are facing an aging tax debt, and the IRS has begun high-pressure tactics to obtain payment, don’t take the chance that the CSED will pass before the IRS can collect.  And avoid signing an agreement to extend the CSED without legal assistance.

Instead, call our tax boutique to discuss your tax case.  We understand that sometimes errors occur in tax reporting, and we also understand that the CSED is designed to limit retribution for taxpayer slip-ups.  We know the intricacies of the CSED, including when there are benefits for agreeing to extensions or when to press for enforcement of the CSED.

Our team of professionals will:

  • Discuss your situation with you and review documents relevant to your IRS issues.
  • Determine the applicable CSEDs for your debt.  And we will inform you of your rights concerning the CSEDs.
  • Analyze your optimum approaches for dealing with the CSEDs and make recommendations personalized for your circumstances.  Sometimes you might be in a good position to allow the CSED to pass.  Other times, depending on your financial condition, it might be to your advantage to agree to an extension of the CSED.
  • Handle all communications with the IRS relating to your tax case.  For instance, if the CSED passes, we would work to ensure that the pertinent property liens and levies against you are released.
  • And counsel you concerning appropriate recordkeeping to ensure your future compliance with the Internal Revenue Code, lessening the chances that a similar situation occurs in the future.

With our knowledge and experience in tax law, our tax professionals will work to protect your rights as a taxpayer while guiding you in compliance with tax law.  If you have aging tax debt, consult with Law Offices of Christy Lee, P.C., for a review of the CSED as it applies to your case.