The IRS generally has 10 years to collect tax debt, with this period typically commencing from the date the tax was assessed.
Understanding the 10-Year Collection Statute of Limitations
The timeframe during which the IRS can legally collect unpaid taxes is known as the Collection Statute Expiration Date (CSED). For most tax liabilities, this period is 10 years from the date the tax is assessed. The "assessment date" is the official date when the IRS records the tax liability on its books, usually when a tax return is filed, or when an audit is concluded and the tax due is determined. This 10-year limitation provides taxpayers with a right to finality, ensuring that tax obligations do not remain indefinitely unsettled.
When the Collection Period Can Be Extended
While the 10-year collection period is a general rule, there are specific circumstances under which it can be extended. These exceptions are typically related to actions taken by the taxpayer or legal proceedings:
Exceptions to the 10-Year Rule
| Condition for Extension | Description |
|---|---|
| Taxpayer Agreement | The 10-year collection period can be extended if the taxpayer agrees to it. This often occurs when a taxpayer enters into an installment agreement to pay their tax debt over time. By agreeing to an installment plan, the taxpayer effectively waives the statute of limitations for the duration of the agreement, allowing the IRS more time to collect the full amount owed. |
| Court Judgment | If a court judgment is obtained by the IRS that allows the collection of unpaid tax, this judgment can supersede the standard 10-year period. A court order can grant the IRS additional time to collect the debt, extending the agency's ability to pursue collection actions beyond the initial statute of limitations. |
| Periods of Non-Collection | Certain actions or circumstances can "toll" (pause) the 10-year collection period. This means the clock stops running for a period, and then resumes from where it left off. Examples include: |
| * Periods when the taxpayer is in bankruptcy. | |
| * Periods when an offer in compromise (OIC) is pending with the IRS. | |
| * Periods when a collection due process (CDP) appeal is pending. | |
| * When the taxpayer lives outside the U.S. for a continuous period of at least 6 months. |
It's important for taxpayers to understand these rules and exceptions, as they dictate the IRS's ability to enforce collection of outstanding tax liabilities.
