Do you know that your tax debt has a statute of limitations? Every tax assessment has an expiration date. That is, the debt is completely erased after a certain time.
What is CSED? How can you benefit from it? How can you calculate a statute of limitations? What conditions extend the 10-year collection period? All the answers are in the article.
What Does CSED Stand For?
The IRS typically gives 10 years to collect taxes and all related penalties and interest from any taxpayer. After 10 years, taxes are considered a statute of limitations. That is, according to laws, the IRS will stop to collect tax debts. You’ll be free of debts and also exempt from interest and penalties. This tax expiration date is your Collection Statute Expiration Date (CSED).
RSED and ASED are other IRS-related terms, but our focus is strictly on CSED in this article.
How to Find Out Your CSED Online and IRS CSED Calculation
The assessment date is essential for the calculation. So, you need to find the start date of your debts to do the CSED, but how do you find out your IRS assessment date?
- Firstly, you can check out at the assessment date if you previously received a Notice of Federal Tax Lien. Your CSED will be 10 years from that date.
- You can get your tax account transcript easily. Just apply from the IRS online. Then, you can calculate based on the assessment date or filing date.
- Look under the Transactions section of your transcript.
- Find the 3-digit IRS transaction code. Generally, this date is the CSED plus any time added by law.
Let’s say you filed the 2020 return in 2023. The CSED starts in 2023 and expires in 2033. Besides, each IRS tax debt from multiple years will get its own CSED.
However, the CSED period may stop when the IRS cannot actively track your tax debt collection. Moreover, even the IRS calculations may not be accurate because of their complexity. That’s why it’s vital to verify calculations with tax law experts.
What can you do if you have made payments after the expiration? You must contact the IRS first to get a refund of the overpaid amount.
The IRS won’t notify you when your debt has expired, but they are no longer legally entitled to collect. However, how can you ensure whether your debt has been erased? You can request an IRS statement to confirm that.
Which Events Can Impact the CSED?
By law, taxpayers can clear their tax debts after 10 years. However, the IRS can temporarily delay this. If the CSED is extended, the tax collection period lengthens. What events can impact the CSED?
For example, if you submit an inappropriate request to the IRS, the CSED pauses during the review and for an additional 30 days afterward. If you sue the IRS, the law suspends while the case is ongoing.
- Requesting an Installment Agreement (IA) suspends the initial ten-year collection period while it’s pending. If it’s rejected, the suspension lasts an additional 30 days.
- Submitting an Offer in Compromise (OIC) suspends the collection period from the submission date until the offer is accepted, returned, withdrawn, or rejected. If it’s rejected, the suspension lasts an additional 30 days.
- When you request a Collection Due Process (CDP) hearing, the collection period stops from CDP requesting time to its resolution or any court appeals. If the final decision leaves less than 90 days on the collection clock, it lasts 90 more days from that decision date.
- Filing an Innocent Spouse claim suspends the requesting spouse’s collection period.
- Bankruptcy, living abroad for six months, and other impactful events on CSED.
Being proactive about understanding your IRS obligations, especially the Collection Statute Expiration Date, is a responsible step.
If you need more clarity on your CSED, we’re ready to help in a free initial consultation.