The Internal Revenue Service (IRS) only has a limited amount of time to take action to collect your delinquent taxes. The Collection Statute Expiration Date (CSED) refers to the amount of time which the IRS has to collect the tax debt you owe. After this time period has ended, the IRS legally may no longer pursue the taxes you were assessed. However, understanding the CSED can be complex — and it’s important to understand how it is calculated and when it can be suspended or extended.
What is the CSED?
The CSED is the statute of limitations the IRS has to collect back taxes. The Statute of Limitation is usually ten (10) years from the date the IRS charged or assessed your taxes. When the IRS assesses taxes owed on your account, the Service will mail a notice or letter that informs you about the taxes you owe, plus any penalties and interest, the reason for the charge, and the next steps you should take. The easiest way to calculate the CSED is to determine the start date for your tax debt.
Certain tax assessments have their own CSEDs. These can include audit assessments, civil penalty amounts, tax assessments arising from amended return filings, and original tax assessments from voluntarily filed returns.
When Can the CSED Be Suspended or Extended?
Although the CSED is typically ten (10) years from the date of the last assessment, there are some instances or actions extend or suspend the IRS’s ten-year CSED. Specifically, the time frame may be suspended when the IRS is prohibited from collecting a tax. In contrast, the CSED is extended when the IRS may legally add to the amount of time it has to collect.
The CSED can be suspended or extended in the following situations:
- You filed for bankruptcy — The CSED can be suspended while a bankruptcy case is pending and extended for six months after the case concludes.
- You filed an Innocent Spouse claim — The CSED is suspended from the date the Innocent Spouse claim is filed until the date a waiver is filed, or the expiration of the 90-day period for petitioning tax court, whichever is earlier. If the tax court is petitioned, the CSED can be tolled until the court has reached a final determination.
- You requested a collection due process hearing — The IRS will toll the CSED while a collection due process hearing is pending.
- You live outside the U.S. for six months or longer — If you live abroad for six months or more, the IRS will extend the CSED.
- You applied for an offer in compromise — If you have requested an offer in compromise, the IRS will suspend the statute of limitations while it is considering your offer, plus an additional 30 days.
- You are in the military — If you join the military, the IRS may suspend the CSED during your service and for an additional 270 days after.
If you ask for an installment agreement, the CSED will be suspended during the period the IRS is reviewing your request. However, the CSED is not suspended once the installment agreement has gone into effect.
Contact an Experienced New York Tax Attorney
If you are facing a tax matter or have questions about the CSED, it’s best to have the guidance of an experienced tax attorney who can advise you. Offering reliable legal services and dependable representation, the legal team at Brinen & Associates assists clients with a broad range of tax matters at both the state and federal levels. Call (212) 330-8151 or send us a message to learn more about how we can help you and your business.