Plenty of U.S. taxpayers are unaware that it is possible to run out the clock on the IRS. In most cases where a taxpayer has an unpaid debt to the IRS, the slate will be wiped clean in 10 years. The date after which the IRS will no longer be able to collect a tax debt is the Collection Statute Expiration Date (CSED) for that liability.
The clock starts ticking on the CSED when an action has been taken to assess the amount of tax owed. The most common triggering event for the CSED is a taxpayer filing a return without paying the balance owed. Once the CSED clock starts ticking, though, some events may stop the clock and so will push back the date. These events include:
- Requesting military deferment;
- Requesting innocent spouse relief;
- Filing for an offer in compromise;
- Getting approved for an installment agreement;
- Filing a Collection Due Process appeal of an IRS collection action;
- Filing for bankruptcy (federal taxes are usually not dischargeable through bankruptcy itself); and
- Living outside the U.S. for at least six months.
Some of the events listed above extend the CSED by as little as 30 days, while others effectively suspend tax collection and, by extension, the CSED for a longer period of time. Before you request a certain type of relief from the IRS, you should speak with an experienced tax attorney to make sure the action does not adversely affect your CSED.
So, Is it a Waiting Game With the IRS?
The IRS will occasionally let tax debt linger until the CSED approaches for a particular taxpayer. During these 10 years, though, the agency has a number of legal tools at its disposal to try to collect unpaid taxes.
Among other things, the IRS might place a lien on your property so that you cannot sell the property and obtain the proceeds from the sale. The IRS might levy, or seize, certain assets to satisfy your tax debt. It even has the authority to garnish your wages.
Typically, though, the mere fact that a particular taxpayer’s CSED is coming up will not magically prompt the IRS to get more aggressive about collecting the unpaid tax. Your account is one of millions the IRS is looking after. If the IRS was serious about collecting your unpaid taxes in the first place, it would have already taken action.
Now, this does not mean that you should not pay your taxes and hope nobody notices. That is a poor strategy the overwhelming majority of the time. If you cannot pay your federal taxes, the IRS will almost certainly notice. Therefore, it’s often better to engage the IRS before your unpaid taxes become a serious problem. The IRS is surprisingly lenient with taxpayers unable to pay.
The good news for taxpayers is that the IRS generally is limited to 10 years to collect unpaid federal taxes. The not-so-good news is that waiting out the IRS is not always the best strategy, which is why you should engage with a knowledgeable tax lawyer to help resolve your tax issues.
Attorney Robert V. Boeshaar has years of experience helping taxpayers resolve stressful situations. His time working with the IRS provided invaluable perspectives that he uses every day. Contact the team to schedule a consultation today.
Robert V. Boeshaar Attorney at Law, LL.M.,PLLC
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