How Far Can the IRS Go Back to Collect Unpaid Taxes?

Last updated: May 07, 2019

Every year, 30 million people end up owing money to the federal government for taxes. If you’re one of those people with unpaid taxes, you might forget about it and let it fall off of your plate. However, it’s unlikely the IRS is going to forget and they could come after you years after you file for something they say you owe.

Here’s everything you need to know about the statute of limitations and how long the IRS can knock on your door for money.

Watch for the Ten-Year Mark

Generally speaking, there’s an approximately 10-year expiration date on when the IRS needs to get your back taxes by. If the IRS collections don’t get what they’re looking for by the time that ten years is up, then they can’t go back any further.

The IRS can collect that far back, starting from the date they assessed your taxes. They set the deadline and they know when their deadline is approaching. If you haven’t paid back taxes by the time that date rolls around, steel yourself for the possibility of some aggressive collection efforts.

There are some exceptions noted below of when they’re allowed to continue collecting, but legally, they can’t go past this deadline. The IRS lets thousands of taxpayers who owe money slip through their fingers every year. Some of these taxpayers breathe a sigh of relief while others, who are chronically late with their taxes, may just live to fight another day.

If your CSED or Collection Statute Expiration Date is approaching, put some money aside to help pay off what you can. You might be able to negotiate with the IRS if the date is fast approaching.

Mark the Start Date Right

If you don’t know when your limitation period begins, you might think you’re out of the woods long before you really are. If you then get loose with your spending and don’t prepare for the potential of paying off your taxes, you might end up dealing with a big bill at the last minute.

The ten-year period starts from when the taxes were assessed, meaning the date printed on the first letter you got from the IRS telling you that you owed them something. The IRS service center dates these forms so that you know the legal status of the situation that you’re in.

If you don’t pay when you file a tax return, you’ll end up getting a bill. The bill states the amount of money you owe in an official written notice, which is part of this legal process. If you don’t fill out the return, you’ll still be asked for what you owe.

In the absence of a filled out tax filing, the IRS might fill one out for you. They’ll create a substitute return to figure out a deficiency assessment. In this case, they’ll start the clock then.

If you try to escape the IRS by not filling out a tax return, you’ll still be on the hook.

How It Drags Over the 10-Year Mark

There are times when a collection period of ten years might last more than ten years. That’s because your CSED is suspended during certain periods. Any time that passes during the suspension isn’t counted toward your 10 years. The statue of limitation is suspended for a number of different reasons. 

During periods when the IRS isn’t allowed to collect from you, this period goes into suspension. If you’re in one of these periods for a year, then they get a full extra year to collect from you.

This happens for some people when they’re filing for bankruptcy. If you end up going to bankruptcy court, you’ll get an automatic stay from the period fo your bankruptcy period plus six months. This can drag your collection period out for a while.

If you’ve reached out to the IRS and requested an installment agreement or something like an offer in compromise to pay it down, then it’s suspended. Any time that the IRS is looking over your status to figure out whether or not to afford you any kind of assistance, the statute is extended.

The IRS even gets the ability to extend the period if they sue you in a federal court, but the likelihood of this is limited.

Asking For an Extension

Not all extensions are court ordered or out of the hands of the individual filer. Some people ask for extensions depending on what they need.

In the past, the IRS would put serious pressure on taxpayers to extend the limitations. The extensions could stretch as long as 20 years in some cases. While this is seemingly voluntary, it was often due to aggressive pressure from the IRS because they wanted to collect their back taxes in full, penalties and all.

If you were ever put under this kind of pressure, you know how intimidating it can be. After years of lawsuits and pushback from lawmakers, people are able to avoid this kind of pressure.

Entering into an installment plan or a partial payment plan with the IRS requires filing some paperwork. In most of these cases, you end up signing a waiver letting them off the hook for the ten-year period. When this is the case, the period is only allowed to be extended for six years.

If the period is close to the end and you still owe the IRS a lot of money, they’ll put some pressure on you to get their money in full. They’ll offer what looks like an attractive agreement for the extension, but in the end, it’s unlikely to benefit you as the taxpayer.

Unpaid Taxes Can Turn To a Major Headache

If you end up with unpaid taxes, you’ll have them hanging over your head for years, collecting interest and fees as you struggle to pay them back or just forget. If you forget to pay your taxes, the IRS is sure to remember and find a way to remind you.

If you’re looking for a tax relief company to work with, check out our guide for more info.