Does IRS Tax Debt Expire?

Written by Banks Editorial Team
2 min. read
Written by Banks Editorial Team
2 min. read

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Do you owe back taxes to the Internal Revenue Service (IRS)? You may be wondering how long the IRS can pursue you before the debt is no longer collectible. Read on to know more about the statute of limitations on IRS collections, instances where it can be stopped and how to move forward with resolving what’s owed in taxes.

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Unpaid Taxes and the IRS

Taxpayers who don’t meet obligations on their taxes may owe penalties. This can include:

The IRS charges you a monthly interest on any penalty you don’t pay in full until the debt is settled. That is why you need to understand these different penalties, what you need to, and how to avoid getting one.

Is There an Expiration Date on IRS Tax Debt?

In most instances, the IRS will have ten years from the date the taxes were assessed to collect the unpaid balance. This is typically on the day the IRS generates a notice or tax bill and sends it to you. 

The Collection Statute Expiration Date (CSED)

As the CSED draws near, it’s not unusual for the IRS to ramp up collection efforts. Their end goal is to collect what’s owed, and the agency will go to extra lengths to recoup back taxes before the deadline. 

Can The Expiration Date Be Tolled? 

Some circumstances may warrant the suspension of the statute of limitations, which means the ten-year collection period comes to a halt. In turn, the IRS has even more time to collect back taxes from you. 

Bankruptcy

If you file for bankruptcy, the IRS will be prohibited from pursuing collection on back taxes if the bankruptcy court issues an automatic stay. You can expect the suspension to remain intact from the time the bankruptcy case commences until six months after it ends. 

Filing an Appeal/Lawsuit

Did you receive a tax bill from the IRS that you disagree with? Filing an appeal can also extend the statute of limitations. 

Offer in Compromise

Whenever you submit an Offer in Compromise to the IRS, it could take some time to receive a decision. In the meantime, the statute of limitations will be suspended while the IRS considers your request. 

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Out of Country Status

Relocating outside the U.S. for six or more consecutive months also halts the statute of limitations. 

Military Deferments

Military deferments also toll the statute of limitations, per the Service Members Civil Relief Act of 2003. Members of the armed forces receive a deferral of up to 180 days if the military service material affects their ability to pay. 

Voluntary Extension

You can opt to extend the statute of limitations for up to six years, although it is not mandatory. However, some individuals are convinced by the IRS to enter into an installment agreement that allows partial payment for what’s owed, and they could inadvertently extend the collection period. But it may be required if you set up an installment agreement with the IRS that allows you to remit monthly payments over time. 

How To Resolve Your Tax Debts

It can be overwhelming to resolve your tax debts, particularly if you owe a hefty amount to the IRS. Fortunately, you don’t have to struggle alone or in silence. 

Reputable firms, like Larson Tax Relief, provide solutions to individuals and businesses with tax problems who are seeking ways to save money, time and the stress that comes with dealing with federal taxing authorities. 

Larson Tax Relief’s team of experts, which includes 18 Enrolled Agents, can also help you get a handle on state tax issues. With over 18,000 happy clients in 50 states to date, they have the expertise needed to help you reach a practical and fair resolution. 

If you owe over $25,000 to federal or state tax authorities, submit your details in this simple form to request a free consultation.

Larson Tax Relief

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