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Tax Help FAQs: IRS Expiration of Statutes

What is an IRS Expiration of Statutes?

The IRS has 10 years from the date of assessment (usually close to the filing date) to collect all back taxes, penalties and interest from the taxpayer. The taxpayer does not owe the IRS anything after the 10-year date has passed.

Taxpayers that are approaching this 10-year date should request copies of their IRS transcripts to verify the assessment date, so they can accurately compute when the 10-year statue to collect will expire.

• If the IRS is attempting to collect a tax liability which has expired under the 10 year statue, then the tax payer must inform the IRS in writing that they no longer have the right to collect this tax liability.
  
  
• If the taxpayer is correct, the IRS will write off the tax liabilities which have expired.
  
  

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  IRS Collection Statute Expiration Dates
  
  The Collection Statute Expiration Date (CSED) for IRS taxes is, in most cases, 10 years. Once this Statute period has run, any remaining back tax debt is forgiven. The statutory period begins on the date the back tax owed is assessed, which is usually shortly after a taxpayers IRS returns are filed. If a taxpayer never filed their returns, the Collection Statute would begin on the date that the IRS creates a substitute return (SFR) for the taxpayer.
  
  In some cases a taxpayer's IRS debt may not expire exactly 10 years from the date of IRS assessment. There are a number of ways that the IRS Collection Statute can be extended. For example, filing a Bankruptcy or Offer in Compromise will usually extend the amount of time the IRS has to collect a tax debt. Leaving the United States for a period of time or other factors can also extend this IRS Statute of Limitations as well. A tax debt which is assessed as a result of a citizen being convicted of tax fraud will never expire.
  
  When working to resolve an IRS tax debt, the age of the debt and CSED date are very important factors to consider when coming up with a plan of action. If the debt is close to expiring, it is very important that both the taxpayer and any tax professional they are working with are careful not to take any action which will extend the IRS statute further into the future.
  
  Background
  
  On November 5, 1990, an amendment to IRC 6502 (Public Law 101?508) changed the collection period from six years from the date of assessment to ten years. Any collection statute that was due to expire before November 5, 1990 was under the six year rule. Any account still open for collection on November 5, 1990 is under the ten year rule.
  
  The Restructuring and Reform Act of 1998 (RRA 98), enacted on July 22, 1998, provided that the Service's authority under IRC 6501(c) and IRC 6502(a)to extend the collection statute of limitations by agreement ended on December 31, 1999. Any extension of collection statute already in effect on December 31, 1999 will expire on the later of the last day of the ten year collection period in IRC 6502(a) or December 31, 2002. There is an exception for extensions relating to the acceptance of an installment agreement. For more information see IRM 5.14.2.1
  
  Statute of Limitations for Collection of Tax from Taxpayer
  
  
• The assessment of a tax imposes a lien on all of the taxpayer's tangible and intangible real and personal property. IRC 6321.
  
  
• Under IRC 6502(a), the IRS has ten years from the assessment date to:
  
  
• Collect the tax by administrative means (seizures, levies, offsets); or
  
  
• Institute a suit for collection or a judgment.
  
  
• If IRS commences timely suit to collect tax or obtain a judgment, then it may continue its efforts to administratively collect the tax beyond the ten-year period. IRC 6502(a).
  
  Collection of Tax from other than Taxpayers - Transferee Liability
  
  
• IRS has one year after expiration of statute of limitations to administratively assess transferee liability. IRC 6901(c).
  
  
• Alternatively, IRS can commence an action to impose transferee liability under state of federal fraudulent conveyance acts. IRS position is that there is no statute of limitations with respect to such actions.
  
  Miscellaneous Time Limitations
  
  
• Ninety days to file petition in Tax Court. IRC 6213(a).
  
  
• Party claiming an interest in property levied upon by IRS must file administrative claim or commence wrongful levy action in federal district court within nine months of date of levy. IRC 6532(c).
  
  
• Refund claims must be filed within three-years of date of return, or, if no return filed, within two years of date of payment of tax. IRC 6511(a).