Section 6502 of the Internal Revenue Code states that the length of the collection period after the assessment of a tax liability is 10 years. The expiration of the collection law ends the government's right to request the collection of liability. The collection period expires 90 days after the date specified in the exemption. A common belief held by many taxpayers is that the IRS can't take any action against them if 10 years or more have passed since they last filed a tax return.
It's true that the IRS can only collect tax debts that are 10 years old or less. However, those 10 years don't begin when you refuse, either accidentally or deliberately, to file your return. In a nutshell, the statute of limitations for federal tax debt is 10 years from the date the taxes were assessed. This means that the IRS must forgive the tax debt after 10 years.
However, there are a few things to consider. In general, the IRS has 10 years after the evaluation date to collect back taxes and tax-related fees, although there are some exceptions. This 10-year limit is known as the Revenue Act Expiration Date (CSED) and frees tens of thousands of Americans from their tax obligations each year. As a general rule, there is a ten-year statute of limitations for the IRS to collect unpaid tax debts.
Basically, the IRS is required to collect outstanding taxes within the ten-year period from the date the taxes were assessed. Once the ten-year period expires, the IRS must stop its collection efforts. The date of your CSED may exceed 10 years from the initial evaluation if the IRS has to suspend collections at any time, which can happen if the IRS is not legally authorized to initiate collection actions against you for any reason. Whenever the IRS cannot currently collect any payments from you, and whenever you contact the IRS and wait for them to deliberate on your offer of a payment plan, or OIC, the 10-year period for paying your tax debt is interrupted.
As former senior IRS collection agents, the professionals at Landmark Tax Group know how the IRS works and how to protect you and your assets. Instead, the 10-year clock starts when the IRS notices your missing return, you file it to get up to date with your taxes, or the IRS files and files a replacement return on your behalf. The IRS can't pursue it forever, and because of the IRS Reform and Restructuring Act of 1998, taxpayers are a little relieved by the IRS collection division's quest to get a balance due. The IRS offers several options from the Fresh Start tax relief program for struggling taxpayers financial companies that file their taxes but cannot pay the full amount of their tax debt.
Once this 10-year period or statute of limitations has expired, the IRS can no longer attempt to collect the balance owed by the IRS. Volunteering and cooperating with the IRS to determine taxes owed and establish a payment plan is a way to avoid criminal liability and get back up to date with the IRS. Depending on your needs, Landmark Tax Group can help you determine the exact expiration date of your IRS collection statute, check the status of your case with the IRS, determine a plan to resolve your IRS collection case, and more. The tax debt forgiveness date is called the Collection Statute Expiration Date (CSED) and refers to the legal time during which the IRS must obtain unpaid tax debts.