Is Your Tax Debt Expiring?
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Collection Statute Expiration Date (CSED)
Facing IRS tax debt can seem endless, but by law the IRS has only 10 years within which to collect. They are limited by the IRS statute of limitations on collections.
When that date arrives, the IRS can no longer legally seek to collect back tax debts. That means your debt will be cleared and you will no longer owe the federal government (assuming you have no new IRS debts). You will also be cleared of any liability for interest or penalties associated with the expired tax debt.
Your tax debt forgiveness date is known as your Collection Statute Expiration Date (CSED). Here, we will explain the CSED and how to calculate the statute of limitations expiry for your tax debt. We will also discuss what conditions can extend your 10-year collectible period, and how to use the IRS statute of limitations to your advantage.
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The IRS Collection Statute Expiration Date
The CSED isn’t always a straightforward calculation of 10 years. First, you need to know the date your tax liability was assessed, or the date that you filed.
For example, if you filed a 2015 return in 2017 and were assessed as owing at that point, the CSED starts in 2017 and expires in 2027. If the IRS filed for you in substitution, the same rule applies; the date of assessment is what matters, not the date the taxes were due.
Each debt has its own expiration date. So, if you have IRS tax debt from multiple years, each new tax debt will get its own CSED.
“Tolling” the IRS Statute of Limitations
While every taxpayer is eligible for tax debt forgiveness after 10 years, the clock can be stopped (or “tolled”), temporarily. Unfortunately, when the CSED is pushed forward, the time during which you are collectible is extended.
The IRS statute of limitations is tolled under a variety of circumstances, including:
- A submission of an Offer in Compromise — the request will suspend the running of the CSED during the time your offer is under review and 30 days after
- A pending installment agreement — the statute is tolled during the approval process, any appeal process and an additional 30 days
- Requests for innocent spouse relief and Taxpayer Assistance Orders
- Filing some appeals with the IRS or a lawsuit against the IRS — the statute is tolled while the appeal or litigation is pending
- Filing bankruptcy — the statute is suspended for the period during which you are under bankruptcy protection and for six months after discharge or dismissal of the bankruptcy
Essentially, any time the IRS is unable to actively pursue collection of your tax debt, the clock stops ticking. If any of the above apply to your scenario, your CSED should be confirmed.
The complexity of the IRS statute of limitations makes the CSED a source of confusion — and not only for taxpayers. According to the National Taxpayer Advocate, the IRS often mistakes the CSED. In a 2013 audit, it was discovered that 21% of CSED calculations by the IRS were not accurate.
When the IRS inaccurately calculates the CSED, they may pursue collections past the date at which a taxpayer was legally free and clear. That’s why it is so important to independently confirm your CSED through expert analysis, as we will discuss below.
Obtaining an IRS Transcript for Your CSED
The CSED for a tax debt can be calculated from an analysis of your IRS transcript. This transcript provides the data of assessment and other details for each tax year. We use information on any dates during which the statute was suspended to calculate the CSED.
If you have received a Notice of Federal Tax Lien, it will also include information we can use to analyze your CSED.
While you can request the CSED from the IRS, you won’t always get a straight answer. Some IRS employees are not aware of the CSED; in general, the IRS may also be reluctant to reveal the date or, as mentioned above, their calculation may not be accurate.
To ascertain your correct CSED, an expert and independent analysis is recommended.
What the IRS Statute of Limitations Means for You
Your CSED is just one factor we consider when coming up with a strategy for IRS tax debt relief.
If your CSED is in the near future, it makes sense to avoid any actions that toll the statute of limitations. Instead, we might opt for a guaranteed or streamlined installment agreement or hardship status. While the statute is tolled while an installment agreement is pending, guaranteed and streamlined installment agreements involve very little delay — and very little impact on your CSED.
If your tax debt is relatively new and you stand a good chance of approval, we might recommend an Offer in Compromise. When the IRS has a substantial period during which to collect your liability, the odds of gaining debt forgiveness are not high. A settlement, however, can significantly reduce the total amount you pay.
Do you need more clarity on your CSED and what the IRS statute of limitations means for your tax debt? We’ll give you our best advice in a free initial consultation. If you choose to work with us, one of our services is an affordable CSED Analysis, which can be the starting point for a tax relief strategy.
You are in good hands with Precision Tax Relief. In more than 700 reviews — more than any other tax relief agency — our clients have given us a 98% satisfaction rating. Find out why more taxpayers are glad they chose Precision.
We Can Help You With Tax Debt Forgiveness
Start with a no-obligation, free consultation now: 1-855-212-5900
Or click here to request a callback
FAQs on the IRS Statute of Limitations
Can I request my transcript directly from the IRS?
You can request your tax account transcripts from the IRS online. However, the assessment date of your tax debt may not be exactly ten years prior to the expiry of your debt. A tax professional can analyze your transcript and provide an accurate CSED.
Will I be notified when my debt reaches the CSED date?
The IRS will not notify you when the statute of limitations has expired on your debt. However, they no longer have the legal right to pursue collections. You can request an IRS account transcript to confirm that the debt has expired.
What should I do when my IRS tax debt expires?
Debt forgiveness means you can legally stop making any installment payments on the expired debt. However, you should always confirm that the statute of limitations has expired before missing a payment, to avoid default.
When your CSED elapses, your IRS transcript should show a code: TC 608, Statute Expiration Date, Clear to Zero. This entry confirms that you now have a zero balance with the IRS, assuming you have no new tax debts.
If there was a lien against your assets, ensure that a Release of Federal Tax Lien has been filed. Take the next step to clear the record of the lien by requesting a Lien Withdrawal. When the lien has been cleared from county records, contact the Credit Reporting Agencies to request that they remove the lien from your credit report, too.
The IRS requested that I waive the statute of limitations. What should I do?
If you are applying for a partial payment installment agreement, the IRS may ask that you waive your CSED. A partial payment plan entails lower payments, often over a longer period of time. The IRS will recognize if your CSED makes the likelihood of recovering the full debt doubtful, under this plan. That is why they may ask that you waive your CSED.
You are not required to waive the CSED and should consult with a tax professional before you sign it.
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