Blog

Home / Uncategorized / What’s the Statute of Limitations on Federal Tax Debt?

What’s the Statute of Limitations on Federal Tax Debt?

Nov 15, 2023 | IRS, Tax Planning

The statute of limitations for the Internal Revenue Service (IRS) to collect the tax amount you owe is typically ten years. This IRS refers to this period as the “Collection Statute Expiration Date (CSED).” However, understand that various laws and actions can impact the CSED — and a variety of circumstances under which the statute of limitations on IRS debt can be extended. If your situation meets certain criteria, the statute of limitations may be extended, and the IRS may have more time to collect the debt owed.  

Understanding the CSED

To understand the statute of limitations on Federal tax debt, be aware that each tax assessment on your account comes with its own CSED. For example, the original tax amounts you owe when you file your federal tax return have a separate statute of limitations for collection from the additional taxes you owe when you amend your return. Distinct CSEDs for more taxes the Internal Revenue Service finds you owe due to an audit and for interest, and civil penalty amounts.    

The IRS rarely levies a taxpayer’s property during the time the CSED is suspended, but there are exceptions to this rule. Specifically, if your future income is levied before the CSED ends, the Service can continue to receive the payments.

If you fail to file a tax return or fraudulently file one, the Internal Revenue Service will file a substitute for return and assess the tax you owe. After the assessment, the ten-year statute of limitations begins. If more tax is due than what was specified on the substitute for return, the IRS will assess you for the additional tax and impose a new CSED. 

Extending and Suspending the Statute of Limitations on IRS Debt

Suspending or extending the IRS’s collection period delays the CSED. Suspending the time to collect tax effectively means pausing the Statute of Limitation. Extending the time means adding time to the tax period — and the Internal Revenue Service can continue to collect tax. Actions that can change the standard ten-year period the IRS must collect the tax you owed, along with any penalties and interest can include:

  • Asking for an installment agreement
  • Filing for bankruptcy
  • Filing an offer in compromise
  • Asking for a collection to due process hearing
  • Filing a request for innocent spouse relief
  • Entering the military in certain types of service

If you live outside the United States for a continuous six months or more, the CSED is suspended. the Statute of Limitation may be extended by at least six months upon your return.  

Other IRS Statutes of Limitation

In addition to the CSED, there are two other statutes of limitation imposed by the Internal Revenue Service. A statute of limitation placed on the time the IRS can assess tax and the time a credit or refund can be obtained. The Internal Revenue Service must usually assess tax within three years after a return is due, including any extensions, or within three years after your return was received — whichever comes later. 

To claim a credit or federal income tax refund for a specific tax year, a taxpayer must do so within three years from the date the federal income tax return was filed or within two years from the date the tax was paid, whichever is later. 

Contact an Experienced New York Tax Attorney

Dealing with the statute of limitations on IRS debt can be overwhelming and it’s essential to have an experienced tax attorney on your side who can help ensure you remain compliant with your tax obligations. Offering skillful representation to individual taxpayers, businesses, entrepreneurs, and corporations, Brinen & Associates represents clients for a wide 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 assist you.

HOW WE CAN HELP

Forming Your Company

Financing Your Company

Operating Your Company

Growing Your Company

Defending Your Company

PRACTICE AREAS

Transactional and Corporate Law

Mergers and Acquisitions

Testimonials

I formerly worked as a satellite employee from my home state of New Jersey. I ended my employment with my former employer in 2016. In 2018, I was sued by my former employer for $1.1 million in Illinois State Court. I was referred to Brinen & Associates, LLC by a friend who is a client of the firm. Brinen & Associates, LLC came highly recommended. I contacted Joshua Brinen and then had a consultation at his office with his colleague Mark White. Together, Messrs. Brinen and White explained my options...

Read More