TAS Tax Tip: Understanding your Collection Statute Expiration Date (CSED) and the time the IRS can collect taxes

TAS Tax Tips: Understanding your Collection Statute Expiration Date (CSED) and the time the IRS can collect taxes

The Collection Statute Expiration Date (CSED) marks the end of the collection period, the time period established by law when the IRS can collect taxes. The CSED is normally ten years from the date of the assessment.

Assessments with their own CSED include but are not limited to:

Original tax assessments from voluntarily filed returns;
Tax assessments arising from amended return filings;
Substitute for Return (SFR) tax assessments filed by the IRS when an individual fails to file a return;
Audit assessments; and
Certain penalty assessments.

Did you know the time the IRS can collect debts can be suspended and/or extended?

The initial ten-year CSED can be delayed by certain events.

The running of the collection period is generally suspended when the IRS is prohibited from collecting tax. The time the IRS can collect is pushed out by the period it is suspended. In other words, the initial ten-year limit to collect is no more than the original ten-years. The IRS generally doesn’t take levy action during the time the collection period is suspended, but there are some exceptions.

In contrast, the collection period is extended when the IRS is legally authorized a specific amount of time be added to the initial ten-years to collect. The IRS is not prohibited or stopped from collecting when the collection period is extended.

Suspending and extending the collection period both delay the CSED.

What are common events that can impact the CSED?

A variety of laws affect the CSED. More than one action can suspend the running of the collection period. However, overlapping situations run simultaneously; the time for multiple events is not added more than once where one event may overlap another.

Read below for examples of common events that can suspend or extend the CSED.

Requesting an Installment Agreement

If you request an Installment Agreement (IA), the time the request is pending pushes out, or suspends the running of, the initial ten-year collection period. An IA request is often pending until it can be reviewed and an IA is established, or the request is withdrawn or rejected. If the requested IA is rejected, the running of the collection period is suspended for 30 days. Similarly, if you default on your IA payments and the IRS proposes to terminate the IA, the running of the collection period is suspended for 30 days. Last, if you exercise your right to appeal either an IA rejection or termination, the running of collection period is suspended by the time the appeal is pending to the date the appealed decision becomes final.

For more information about tax payment options you can refer to Tax Topic No. 202.

Filing for Bankruptcy

If you file for Bankruptcy, the running of the collection period is suspended during the time the bankruptcy is pending. Generally, a bankruptcy is pending from the time a petition is filed to the date the bankruptcy is discharged, dismissed, or closed. Further, the running of the collection period is extended for an additional 6 months upon the conclusion of the bankruptcy.

You can get more details by reading Publication 908, Bankruptcy Tax Guide.

Submitting an Offer in Compromise Agreement

If you submit an Offer in Compromise (OIC), the running of the collection period is suspended from the date the offer is pending to the date the offer is accepted, returned, withdrawn, or rejected. If your Offer is rejected, the collection period is suspended for an additional 30 days and, if you file an appeal of the rejection, the collection period is suspended while the appeal is pending.

Tax Topic No. 204 can help you better understand the details of OIC agreements.

Requesting a Collection Due Process Hearing

If you request a Collection Due Process (CDP) hearing, the running of the collection period is suspended from the date the IRS receives the CDP request to the date the taxpayer withdraws the request or the date the CDP determination becomes final, including any court appeals. If less than 90 days until the CSED remains when the determination becomes final, the collection period is extended to 90 days from the date of the final determination.

Read Publication 1660, Collection Appeal Rights, for important information about CDP and your rights.

Filing an Innocent Spouse Claim

If you file an Innocent Spouse claim, then only the running of the requesting spouse’s collection period is suspended from the date the Innocent Spouse Claim was filed until the earlier of the date a waiver is filed, or until the expiration of the 90-day period for petitioning tax court, or if tax court is petitioned, the date the tax court decision becomes final. In each instance where the tax court was petitioned, the collection period is extended an additional 60 days.

Refer to Tax Topic No. 205 to learn more about Innocent Spouse Relief.

What happens when the collection period ends?

When a specific collection period ends, the IRS may no longer initiate administrative or judicial collection of the remaining assessed tax debt. If the IRS levies on a taxpayer’s fixed and determinable right to future income prior to the expiration of the associated collection statute, the IRS may legally continue to attach to and receive payments from that levy beyond the expiration of the CSED.

How do I find out what my CSED is for one or more of my tax balances?

The IRS’s central database maintains a current calculation of the CSED based on combined information that has been input on a particular account and for the specified tax periods they apply. Account additions and/or changes are reflected as numerically coded start and stop dates.

You can obtain Account Transcripts through the IRS online portal (available at IRS.gov) or by completing Form 4506-T, Request for Transcript of Tax Return. The earliest CSED will display on the account transcript.

You may also contact the IRS by calling the toll-free line at 800-829-1040, and requesting the IRS provide an explanation of how a particular CSED is computed when there are questions concerning the accuracy of the CSED shown on an account transcript.

What if I disagree with the IRS’s computation of a particular CSED?

If you disagree with one or more CSEDs shown on your account transcript(s) and/or provided to you by the IRS, contact the IRS and request they review your account and verify and explain the accuracy of the CSED calculation you are questioning. According to its Mission Statement, the IRS will “[p]rovide America’s taxpayers top quality service by helping them to understand and meet their tax responsibilities and by applying the tax law with integrity and fairness to all.”

If the IRS does not provide you with an answer you believe to be accurate, you may request the Taxpayer Advocate Service (TAS) review your issue and provide you with an explanation of how a particular CSED was or should be calculated.

To request help from the Taxpayer Advocate Service, submit a completed Form 911, Request for Taxpayer Advocate Service Assistance.

What can I do if I made payment(s) after my CSED expired?

If the IRS collected payment of an assessed tax debt or you made a voluntary payment after the CSED expired:

You may initiate contact with the IRS to request a refund of the amount you overpaid after the CSED. This request must occur before the Refund Statute Expiration Date. Refer to Tax Topic No. 160, Statute Expiration Dates, for more information on submitting a claim for refund.