The statute of limitations for collection, is a time limit, on the Internal Revenue Service (“IRS”), in which to collect delinquent taxes, from a particular taxpayer, for a particular tax year.  In general, the IRS has ten (10) years, after the date of assessment, in which to collect.  This ten (10) year deadline is referred to as the collection statute expiration date (“CSED”).  The ten (10) year clock begins as of the day of assessment.  The CSED provides finality, to the IRS and to the taxpayer, after the IRS has had a reasonable opportunity to collect.

The CSED can be extended.  Since the CSED is timed against the date of assessment, anything that extends the date of assessment correspondingly extends the CSED.  The CSED can also be extended, by written agreement, between the IRS and the taxpayer.  The IRS must advise the taxpayer of his right to refuse to extend the CSED.

The CSED can be suspended for a variety of reasons.  If the CSED is suspended, then the remaining time on the CSED is tacked on to the end of the suspension period in order to determine the adjusted CSED.  Some of the more common reasons, for the suspension of the CSED, are as follows.

  • Bankruptcy (“BK”) – the CSED is suspended, for the time period, of the BK’s automatic stay, plus six (6) months.
  • Offer In Compromise (“OIC”) – the CSED is suspended, for the time period, that the proposed OIC is pending including any timely appeals .
  • Installment Agreement (“IA”) – the CSED is suspended, for the time period, that the proposed IA is pending including any timely appeals.
  • Collection Due Process Hearing (“CDPH”) – the CSED is suspended, for the time period, that the requested CDPH is pending including any timely appeals.

In the event of an unfiled or fraudulent tax return, the IRS can file what is known as a substitute for return (“SFR”).  Under such a scenario, the CSED is ten (10) years, after the date of assessment, of the SFR.

Finally, the IRS can no longer collect after the occurrence of the CSED.

Internal Revenue Manual §5.1.19