How Long Does the IRS Have to Collect Back Taxes? Understanding the IRS Collection Statute of Limitations
When dealing with back taxes, one common question I receive is: how long does the IRS have to collect?
The answer lies in the collection statute of limitations, commonly referred to as the CSED (Collection Statute Expiration Date). Here’s an overview of how this works, potential extensions to the CSED, and what you can do to monitor the CSED for your back taxes.
The 10-Year Rule: A General Overview of the Collection Statue of Limitations
As a general rule pursuant to Internal Revenue Code § 6502, the IRS has 10 years from the date taxes are assessed to collect any unpaid taxes. If the IRS does not collect within this timeframe, they are barred from doing so.
But what does “assessment” mean? For most taxpayers, taxes are assessed on the date the return is filed or when the filing deadline occurs. For example:
- If your 2024 tax return is filed on time by April 15, 2025, and you owe $1,000, the IRS will have until April 15, 2035, to collect that amount.
Assessments can occur after the return filing date, including when a tax return is audited and additional tax is assessed.
Events That Extend the 10-Year Limit
While the 10-year rule seems straightforward, certain events can pause or extend the collection statute of limitations. These include:
- Bankruptcy Proceedings
If you file for bankruptcy, the statute is paused for the length of the bankruptcy proceedings plus six additional months. - Requests for Collection Relief
When you request relief options such as an installment agreement, offer in compromise, or a collection due process hearing, the statute is paused for the duration of these processes plus an extra 30 days. - Other Special Circumstances
There are additional situations that could affect the statute of limitations, including being outside the United States for an extended period of time. Consulting with a tax attorney is crucial to understanding how the CSED applies in your situation.
Why Knowing Your CSED Is Essential
Knowing the expiration date of your collection statute is vital, as it can sometimes provide a defense against IRS collection efforts. If the IRS attempts to collect after the CSED has expired, they no longer have the legal authority to do so.
To determine your CSED, you can:
- Request IRS Transcripts: These documents show what the IRS believes the statute of limitations is for your account.
- Consult an Expert: Tax attorneys can review your situation and help you accurately compute the CSED, especially in cases with extensions or complex circumstances.
How to Access Your IRS Tax Transcripts
You can obtain your tax transcripts through the following methods:
- Online: Log in to your account on the IRS website.
- By Phone or Fax: Request your transcripts directly from the IRS.
- Using a Representative: A representative, such as a tax attorney, CPA, or EA, can pull transcripts from the IRS on a client’s behalf with the proper authorization.
Your transcripts will indicate the IRS’s calculation of your collection statute expiration date, helping you verify or dispute their timeline if needed.
Get Help with IRS Collection Statute of Limitations Issues
Understanding the collection statute of limitations can be a game-changer if you owe back taxes. Whether you’re looking to verify the timeline, explore your options, or dispute IRS claims, seeking guidance is a smart move.
If you need assistance with your back taxes or have questions about your collection statute expiration date, contact Andrew Bosserman at Boss Tax Law today. As a seasoned tax attorney, I can help you navigate the complexities of tax laws and protect your rights.