Once a tax is assessed, the IRS generally has 10 years to collect it. That deadline is known as the collection statute expiration date, or CSED. The rule is simple to state, but several events can suspend or extend it, so the actual deadline for a given balance can fall later than 10 years after assessment.
The Basic Rule
Under Internal Revenue Code section 6502(a), a tax that was timely assessed may be collected by levy or by a court proceeding only if the levy is made or the proceeding is begun within 10 years after the assessment. For example, if a tax was assessed on May 15, 2017, and nothing suspended or extended the period, the CSED would generally fall on May 15, 2027.
When the Clock Starts
The period runs from the date of assessment, not from the end of the tax year or the due date of the return. Tax shown on a filed return is assessed after the return is processed. Additional tax from an audit is assessed later, for example after the taxpayer agrees to the changes, after the period for petitioning the Tax Court on a notice of deficiency expires, or after a Tax Court decision becomes final. Because each assessment starts its own 10-year period, one tax year can have more than one CSED.
Events That Suspend the Collection Period
- Offer in compromise. Under section 6331(k)(1), the IRS may not levy while an offer in compromise is pending, for 30 days after a rejection, and while a timely appeal of the rejection is pending. The collection period is suspended for those periods.
- Installment agreement requests. Under section 6331(k)(2), the same no-levy rule applies while a request for an installment agreement is pending, for 30 days after a rejection or termination, and during a timely appeal, and the collection period is suspended for those periods. It is not suspended merely because an installment agreement is in effect.
- Collection Due Process hearings. Under section 6330(e), a timely request for a hearing suspends the collection period while the hearing and any appeals are pending, and the period cannot expire before the 90th day after a final determination.
- Bankruptcy. Under section 6503(h), the period is suspended while the IRS is prohibited from collecting because of a bankruptcy case, plus six months.
- Absence from the United States. Under section 6503(c), the period is suspended while the taxpayer is outside the United States for a continuous period of at least six months.
Events That Extend the Collection Period
- Agreed extensions. Section 6502(a)(2) permits an agreed extension of the collection period only in limited situations: in writing when an installment agreement is entered into, or before a levy is released after the 10-year period has run.
- Court proceedings. If the government timely begins a court proceeding to collect the tax, the period for collecting by levy is extended until the liability, or a judgment arising from it, is satisfied or becomes unenforceable.
Collection alternatives affect the CSED differently. A pending offer in compromise or installment agreement request suspends the collection period, while an installment agreement that is in effect does not, unless the taxpayer agreed in writing to extend the period.
Currently Not Collectible Status
The IRS may temporarily delay collection when a taxpayer is unable to pay. That status does not by itself suspend the collection period, and interest and penalties continue to accrue on the balance while collection is delayed.
What Happens When the Period Expires
Once the collection period expires, the IRS generally can no longer collect the remaining balance by levy or court proceeding. State tax agencies follow their own rules, and their collection periods can differ significantly from the federal rule.
Determining the CSED for a Balance
IRS account transcripts show assessment dates and many of the transactions that affect the collection period. Because suspensions can be difficult to track, a computed date should be checked against the full account history before it is relied on.
The Bottom Line
The 10-year collection period begins on the date of assessment, and offers in compromise, installment agreement requests, Collection Due Process hearings, bankruptcy and extended time abroad can suspend it. Understanding how a particular balance’s CSED has been affected is an important part of choosing among payment plans, offers and other collection alternatives.
Questions about an IRS balance?
Tax attorney Cassra Minai, Esq. can review your account and collection options in a confidential consultation.