Does IRS Tax Debt Ever Expire? A Guide to the 10-Year Statute of Limitations

Tax season means people seeking answer for tax questions. While some are more complex than others, every tax question has an answer (although you may not like it). This includes those concerned with IRS debt and how long the agency has to collect.

The short answer is that the IRS cannot try to collect back taxes forever, but it’s not quite that simple. This article examines and explains the amount of time the IRS has to find you and collect taxes, which depends on when you filed and whether you took any actions to pay your overdue taxes during that time. If you owe the IRS, consider speaking with a tax attorney.

The Two IRS Statutes of Limitation

There is no single IRS statute of limitations. The IRS can assess your taxes due for any tax year for three years from either of the following, based on whichever is later:

• The date of the return
• The date of filing

The tax assessment means an IRS officer has reviewed your taxes and affirmed the amount owed to the government. The April 15 due date is the start date for the three-year assessment period, so when you file your taxes does not affect that.

The 10-year collection period or Collection Statute Expiration Date (CSED) begins on the date of the tax assessment. In theory, the collection process could last up to 13 years from the date of your last filing: three years from the date of the return, and 10 years from the date of the assessment.

The CSED prevents the IRS from collecting on income tax returns filed decades ago and blocks the agency from collecting on unpaid taxes forever. However, some taxpayer actions can halt the statute and give the IRS more time to collect your taxes.

Running Out the Clock

Can you just not file or wait out the IRS? You can try, but success is unlikely. The CSED is not a magic “avoid taxes and jail” card. The IRS collection statute of limitations begins when you file a tax return. If you never file, the statute never begins. The IRS can begin collections whenever it learns you owe taxes. The agency has other means of collecting delinquent taxes, which makes it a good idea to consult a tax professional if you have long-overdue taxes.

Certain actions, such as filing an amended return or calling the IRS to offer to pay your delinquent taxes, could make things worse by tolling (pausing) the deadline. If you’re in this situation, consider speaking with a tax attorney before contacting the IRS.

Tolling: How You Can Accidentally Stop the Clock

“Tolling” is a legal term for a pause. Tolling a deadline means extending it for a certain time period for legal reasons. For example, if someone cannot file a lawsuit because they are underage, the law extends, or “tolls,” the time to file their lawsuit until they are old enough.

In the case of the collection statute of limitations, certain actions can extend the time the IRS has to collect your taxes. If you do not want this to happen, try to avoid doing any of these things without talking to your attorney first:

Request an Installment Agreement

Taxpayers may request an installment agreement when they owe the IRS money. You can pay your back taxes over a period of time, usually three to six years. An installment agreement prevents the IRS from executing any tax levies against you during that period. As long as you stay current on your installment agreement and file your tax returns annually, the IRS cannot continue any collection procedures.

There are several types of payment plans depending on the amount of your back taxes. The IRS prefers monthly payments. If you miss any, the IRS can resume collections immediately.

Offer in Compromise

If you can’t pay your back taxes in full or make a monthly installment payment, you can make an offer in compromise (OIC). Like an installment offer, the IRS cannot collect while it considers your offer. If they reject the offer, the collection process will resume. There is no time limit for negotiating an OIC, but the procedure tolls the collections process while you and your attorney arrange the details with the IRS.

Request for a Due Process Hearing

You can request a collection due process hearing (CDP). The IRS must send you notice of an intent to file liens and other actions during the process. If you believe you have not received these properly, or that there have been other violations of your right to due process, you can request a hearing to challenge the collection process. You have 30 days to do this.

You should not request a CDP without first consulting an attorney. If the hearing officer denies your request or you lose your challenge, the collections process resumes immediately.

Other Things that Toll Collections

The collections process is also tolled if:

• You have filed for bankruptcy
• You are serving in the military or live outside the U.S.
• Your case is in the U.S. tax court

These actions all give the IRS additional time beyond the 10-year statute of limitations to collect back taxes and any additional fines and penalties. You can also file a waiver to extend the limitations period if the period is about to expire and you want to keep the IRS from taking collection actions.

When the Statute of Limitations Does Not Apply

There are instances in which the statute does not affect the collection process. The IRS can begin assessment and collection proceedings without limitations if:

• Someone files a false or fraudulent return
• Committed intentional tax evasion (as opposed to carelessness or negligence)
• Did not file a return

Tax fraud and tax evasion are criminal offenses when committed with the deliberate intent to defraud the government. Failing to file returns with an intent to defraud can result in jail time and other criminal penalties.

The IRS realizes that some individuals miss the filing deadline due to simple carelessness or an inability to pay their full tax liability. You are still responsible for the full amount, plus interest and penalties, when the IRS catches up with you. While the IRS can provide some answers for tax issues, speaking with a tax attorney before moving forward is often the best option.

My 10-Year CSED Is Approaching. What Should I Do?

Do not call or contact the IRS yourself. Calling the IRS could accidentally toll the statute of limitations. Even suggesting a payment plan or OIC could be enough to halt the CSED. Consider these options instead:

• You can obtain your IRS account transcripts without telling the IRS why you need them. If you believe your deadline is approaching, do this as soon as possible. The IRS website lets you download a copy, or you can request one by mail.
• Contact a tax attorney. The attorney can review the transcript and determine the actual CSED. Confirmation that the ten years are up lets you know if you’re beyond possible collection actions. The attorney can also check for unrecognized tolling actions or other delays.

A tax lawyer will then explain your best options. These may include waiting it out or contacting the IRS if the deadline is farther away than you thought. If the IRS has already begun tax collection actions, such as tax liens and levies, a tax attorney can help with contacting the IRS and arranging payment plans or other repayment methods.

Get Legal Advice From a Tax Attorney

If you have unpaid federal taxes and believe the collection period is due to expire, consider speaking to a local tax lawyer as soon as possible. Unpaid taxes may also involve your state tax collector, so local tax professionals can give you advice about how to manage your state collection agencies as well. If you have received a collection notice or notice of levy or garnishment, let your attorney help you relieve your stress and work on arranging payments with the IRS.