What is a Collection Statute Expiration?

by Harry Galstian

May 17, 2013

Is your IRS debt over 10 years old?

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The Internal Revenue Service has 10 years to collect outstanding tax liabilities, from the date assessed. The 10-year mark is calculated from the day a tax liability has been finalized. A tax liability can be finalized in a number of ways. It could be a balance due on a tax return, an assessment from an audit, or a proposed assessment that has become final. From that day, the Internal Revenue Service has 10 years to collect the full amount, plus any penalties and interest. If the Internal Revenue Service doesn’t collect the full amount in the 10 year period, then they must cease collecting on the remaining balance, since the statute of limitations has expired.

Most taxpayers and even some tax professionals are unaware of the fact that the Internal Revenue Service must collect a tax debt within 10 years. The 10 year period isn’t based upon the year for which the taxes are due but rather the date the liability was actually assessed.

Why is the Internal Revenue Service still collecting on a tax debt from 12 years ago?

As with all Internal Revenue Service rules, the Collection Statute has many exceptions. Some actions that will extend the collection statute date are:

  • If the taxpayer agrees in writing to allow the Internal Revenue Service more time to collect the tax by signing a waiver
  • If the taxpayer files for Bankruptcy during the 10 year period
  • If the taxpayer files an Offer in Compromise during the 10 year period
  • If the taxpayer files an application for Taxpayer Assistance Order from the Taxpayer Advocate Service during the 10 year period
  • If the taxpayer files a request for a Collection Due Process hearing

There are some instances where a tax debt from over 20 years ago is still being collected by the Internal Revenue Service!  This is why a skilled and experienced Tax Attorney is required to successfully represent you with the Internal Revenue Service.  Our tax experts at Direct Tax Relief will request your transcripts from the IRS to analyze and interpret them in order to choose which tax solution is most advantageous to you.  Direct Tax Relief will advise you of the best course of action and together we will put an end to your Internal Revenue Service tax problems!

Will the Internal Revenue Service Notify Me Once the 10-Year Statute Expires?

The Internal Revenue Service will NEVER inform you when the 10 years are up. They will continue to send you invoices and collect on the debt. It is up to the taxpayer and their representative to prove to the Internal Revenue Service that the 10-year collection statute has in fact expired. It is very important to note that although tax liens can no longer be enforced, your tax lien may be still on file with credit bureaus or with your local recording office unless it is requested to be released.

As noted above there are a variety of circumstances that permit the Internal Revenue Service to extend the Collection Statute Expiration Date. Let Direct Tax Relief be your advocate. Contact us to provide IRS tax debt relief and resolve your outstanding tax debt.