How long does IRS have to collect taxes?

By | January 10, 2016

As a general rule, there is a ten year statute of limitations on IRS collections. This means that the IRS can attempt to collect your unpaid taxes for up to ten years from the date they were assessed. Subject to some important exceptions, once the ten years are up, the IRS has to stop its collection efforts.


How long does IRS have to collect taxes?

The IRS can attempt to collect your taxes up to 10 years from the date they were assessed. However, there are ways this time period can be suspended. For example, by law, the time to collect may be suspended while: IRS considering your request for an Installment Agreement or Offer in Compromise. If your request is rejected, we will suspend collection for another 30 days, and during any period the Appeals Office is considering your appeal request.

You live outside the U.S. continuously for at least 6 months. Collection is suspended while you’re outside the U.S.

The tax periods the IRS is collecting on are included in a bankruptcy with an automatic stay. The IRS will suspend collection for the time period we can’t collect because of the automatic stay, plus 6 months. • You request a Collection Due Process hearing. Collection will be suspended from the date of your request until a Notice of Determination is issued or the Tax Court’s decision is final.

IRS considering your request for Innocent Spouse Relief. Collection will be suspended from the date of your request until 90 days after a Notice of Determination is issued, or if you file a timely petition to the Tax Court, until 60 days after the Tax Court’s final decision. If you appeal the Tax Court’s decision to a U.S. Court of Appeals, the collection period will begin 60 days after the appeal is filed, unless a bond is posted.


What is an IRS Assessment of Tax Due?

The time the IRS has to collect begins when they place your debt officially on their books.  This is called an assessment.  Assessments typically occur in three situations: (1) after you file your tax return and there is an amount due but not paid (2) if you did not file a return, the IRS will make an estimated return filing and put an estimate of your debt on their books (3) after the IRS completes an audit of your tax return. If your Collection Statute Expiration Date (CSED) is near, the IRS may act aggressively to get you to pay as much as possible before the deadline or agree to extend it.


IRS Collection Extension

The 10-year statute of limitations for tax collection isn’t set in stone, and certain events can extend the amount of time the IRS has to collect from you. If you file bankruptcy or leave the country, the statute of limitations stops running and resumes once your bankruptcy case is complete or you return to the U.S. Filing an offer in compromise in an effort to settle your tax debt can extend the statute of limitations by one year or the duration of your proposed payment plan. If you want to pay your debt but the statute of limitations has either expired or is close to expiring, you can sign a waiver and extend the collection period voluntarily.

As of December 31, 2013, 2,371 taxpayers remain subject to IRS collection action because of waivers of the applicable statutory period for collection, which violate the IRS policy limit of five years. Before 2000, IRS collection personnel solicited waivers to extend the collection period when it did not appear the taxpayer could pay the tax owed prior to the collection statute expiration date (CSED). Congress limited this practice as part of the IRS Restructuring and Reform Act of 1998 (RRA 98), which generally ended CSED waivers, other than for extensions entered in connection with installment agreements (IAs).3 In response to Taxpayer Advocate Directive (TAD) 2010-3, the IRS Small Business/Self-Employed Division (SB/SE) and TAS formed a workgroup to investigate and resolve CSED extensions that exceeded five years. The IRS has placed almost 82 percent (1,939) of these accounts in currently not collectible (CNC) status or in the collection queue, and has no plan to collect these amounts. A TAS analysis of these accounts reveals that 309 of these taxpayers are deceased. Further, more than half of the taxpayers subject to these CSED extensions owe more than $50,000, of which almost 76 percent is attributable to accrued penalties and interest.