IRS 10-Year Statute of Limitations on Tax Collections: Does Tax Debt Expire in 10 Years?

If you’ve just recently been informed about a past debt, you might wonder if tax debt expires. The 10-year statute of limitations on tax debt collections typically gives the IRS a specific time frame to get what they owe. After those 10 years are over, the debt expires. That’s a huge relief!

Your actions matter, though, because you could restart the clock or impact the statute of limitations in other ways. The statute of limitations clock also doesn’t start until the date your tax is assessed, so the IRS’s actions matter, too. Find out more about the 10-year statute of limitations laws regarding tax debt collection and how it could potentially impact your tax balance below.

What is the 10-Year Statute of Limitations for IRS Collections?

A statute of limitations is a specific time frame set forth by law that allows one party to take a specific legal action. When it comes to tax debt collection, statute of limitation laws outline the legal time period in which the IRS can review, analyze, and resolve tax balances. 

The ten-year statute of limitations for IRS collections begins on the date the tax is assessed and ends on the Collection Statute Expiration Date (CSED). After the ten-year period of time, the IRS no longer has a legal right to pursue collections on that debt.

The IRS is also bound by two other statutes of limitations. 

• Assessment statute – The IRS generally only has three years after a tax return is due to assess a tax debt. 
• Refund statute – They also will only honor a tax claim, credit, or refund within three years from the date you filed your return or two years from the date you paid a tax.

Events that Toll or Extend the 10-Year Collection Period

Tolling the statute of limitations means that you’ve suspended the clock temporarily. When you toll the statute, it could extend the ten-year collection period further into the future. There are a few things that could happen that extend the clock on your tax debt including:

• A bankruptcy filing pauses the clock
• The clock is paused if the IRS needs to review an Offer in Compromise request
• The timer will stop temporarily if you request a collection due process (CDP) hearing
• Collections pause while you are living outside of the US or serving in a combat zone

Once the tolling event stops, the clock resumes, and your CSED will be extended by the duration of the suspension.

Resolution Options to Help Reach the Statute Expiration When You Can’t Pay

When you have unpaid back taxes that you know you genuinely can’t pay off in full, even over time, know that there are still options available to you. The most common solutions include applying for a partial payment installment agreement and applying for currently non collectible status.

Partial Payment Installment Agreement (PPIA)

A partial payment installment agreement allows you to make small payments over time until the CSED. Once the CSED passes, the remaining balance will no longer be collectible by the IRS.

You and the IRS benefit from this type of arrangement because you won’t have to pay your full tax liability, but the IRS will still recover some of what they’re owed.

Currently Not Collectible (CNC) Status

If you’re genuinely unable to make any payments, then you can file for currently non collectible status. This financial hardship status pauses tax debt collections, but you won’t have to make any payments during the pause. While you are under this status, the clock on your statute of limitations will continue to run. The IRS may check on your financial status from time to time to see if you’re economic situation has improved, but if it stays the same, then you won’t have to pay anything until the CSED passes and your debt expires.

Why Waiting Out the Statute Isn’t Always the Best Strategy

Once you realize that the IRS only has ten years to collect on a tax debt, you might think your best strategy is simply to wait it out. While that might be a good option if your debt will expire soon, it might not be best if you have a lot of assets that could be put at risk for seizure or if you make a significant income through a traditional employer.

During the collection process, the IRS has the authority to pursue wage garnishment or file a levy against your property if you don’t pay what you owe. The IRS might even move to confiscate and sell your property to satisfy the remainder of your debt. What’s more, you might also incur significant penalties and interest fees by attempting to wait it out.

Rather than risk ruining your professional reputation, physical property, and the overall quality of your life, it might be wise to consult with a tax resolution specialist to weigh out your options and determine the best strategy.

How to Check the CSED on Your Tax Debts

Every tax debt has an assigned collection statute expiration date assigned to it. This date is determined based on when the debt was assessed by the IRS, and it’s extremely important. After that CSED date passes, the IRS no longer has a legal right to pursue collection efforts against you.

So, how can you check and verify your CSED? This information is located on your tax transcript. If you have an online tax account with the IRS, then you can navigate to the IRS website and sign into your account. Complete Form 4506-T to request a transcript. If you’d prefer, you can request a paper form to be mailed to you by calling 800-908-9946.

On your transcript, search for the transactions section and find the 3-digit IRS transaction code that has a date below it. This is your CSED.

FAQs: 10-Year Collection Period Statute of Limitations

Do you have more questions about the ten-year statute of limitations on tax debt collection? While the best answers will come directly from a trusted tax attorney, we’ll provide an overview of some of the most frequently asked questions below.

What is the IRS Collection Statute Expiration Date (CSED)?

A collection statute expiration date (CSED) is the specific date when the IRS loses the legal right to seek collections on that debt. In most cases, this date is exactly ten years from the date the tax was originally assessed, but other factors could alter the date.

You could have multiple CSEDs on your tax account if you have multiple tax assessments that you owe a debt on. For instance, you could have a CSED on your original tax amount and a different CSED on certain penalties and interest you acquired due to not paying that debt.

Can the IRS Still Collect My Tax Debt After the 10-Year Statute Expires?

The IRS cannot legally pursue a tax debt once the CSED passes, but that date could be longer than ten years if the statute was extended. If you willingly choose to pay the IRS, then they can accept payments, but you are not under any legal obligation to pay once the CSED passes.

What Happens to My Tax Debt if I Request an Offer in Compromise (OIC)?

When you request an offer in compromise, the IRS temporarily suspends the CSED while they review your application. If the OIC agreement is rejected, the CSED will be suspended for an additional 30 days.

Is the CSED Affected if I Haven’t Filed a Return?

If you haven’t filed a return, then it’s possible that the IRS has not yet assessed your tax debt, which means the CSED isn’t set yet. The CSED starts at the time your tax debt is assessed. If you didn’t file, then the IRS has up to three years to assess the debt. 

When you don’t file, the agency might file for you in the form of a Substitute for Return. This return will estimate a tax debt for you. The CSED will begin on the date of this assessment.

If you later decide to file your return, the CSED will not change.

How Does CNC Status Help if I Can’t Afford to Pay My Tax Debt?

CNC status is extremely helpful if you can’t afford to pay your debt because it allows you to not make payments but also protects you from further collection efforts from the IRS. Since IRS tax debt expires and the clock remains ticking while you’re in CNC status, it remains a great option for those in economically disadvantaged positions.

Are You Ready to Resolve Your IRS Tax Problems?

Have you been struggling to resolve a past tax debt for far too long? If you’re ready to resolve your IRS tax problems once and for all, then it’s typically your best option to speak with an informed tax resolution attorney.

At W Tax Group, our team of dedicated tax lawyers can help you identify your best tax strategy moving forward based on the specific facts regarding your tax debt, your current financial situation, and the tax resolution strategies available to you.

Don’t make the mistake of attempting to tackle your debt on your own if you think it’s close to expiring, as your actions could restart the statute of limitations on the collections process.

Schedule a free consultation with our office now to discuss your tax problems in more detail with our team.