26 USC 6502: How Long Can the IRS Collect a Tax Debt?
The government's power to collect tax debt is limited by law. Understand the factors that define the IRS collection period and its definitive expiration.
Federal tax law provides a defined window for the Internal Revenue Service (IRS) to collect outstanding tax debts, known as a statute of limitations. This framework is governed by specific rules that dictate when the collection period starts, what events can pause it, and the ultimate consequences of its expiration.
The 10-Year Collection Statute
The Internal Revenue Code, specifically section 6502, grants the IRS a 10-year period to collect a tax liability. This collection window does not begin on the date the tax was due or when the tax return was filed; instead, the 10-year clock starts on the date of “assessment.” An assessment is the formal recording of a tax debt in the IRS’s records, which legally establishes the taxpayer’s liability.
An assessment can occur in a few ways. The most common is a self-assessment, which happens when a taxpayer files a return and the IRS processes it. Another way an assessment occurs is following an audit if an examination determines that additional tax is owed.
For a return filed on or before the April 15th deadline, the assessment date is usually near that date. If a return is filed late, the assessment date will be the later date when the return is processed.
Actions That Suspend the Collection Period
While the 10-year collection period seems straightforward, certain actions taken by a taxpayer can pause, or “toll,” the clock, extending the collection deadline. The collection clock does not run while the IRS is legally prohibited from taking collection action due to these specific requests.
- Filing for bankruptcy suspends the collection period during the entire bankruptcy proceeding and for an additional six months after the case is concluded.
- Submitting an Offer in Compromise (OIC) on Form 656 to settle a tax debt also tolls the statute. The clock is paused from the time the OIC is submitted until a decision is made, and if rejected, it remains paused during the 30-day period to file an appeal and throughout any subsequent appeal.
- Requesting an Installment Agreement on Form 9465 stops the collection clock while the request is pending. If the agreement is rejected or terminated, the clock remains paused for an additional 30 days.
- A request for a Collection Due Process (CDP) hearing using Form 12153 suspends the collection statute for the duration of the hearing and any related court appeals. When the hearing determination becomes final, the collection period will not expire for at least 90 days.
- A request for Innocent Spouse Relief under Form 8857 also pauses the collection statute. The clock stops while the request is pending and during the 90-day period to petition the Tax Court, and if a petition is filed, the suspension continues until the court’s decision is final, plus an additional 60 days.
- Being physically outside of the United States for a continuous period of at least six months will suspend the collection clock for the entire duration of the taxpayer’s absence.
Verifying Your Collection Statute Expiration Date
The specific date on which the IRS’s authority to collect a tax debt ends is known as the Collection Statute Expiration Date (CSED). This date is calculated by starting with the assessment date and adding ten years, plus any time the collection period was tolled. Taxpayers can verify their CSED by obtaining an official IRS Account Transcript for the tax years in question.
An Account Transcript can be requested for free from the IRS website or by filing Form 4506-T, Request for Transcript of Tax Return. The transcript lists transactions by date and code, and the initial assessment is typically marked with Transaction Code 150. The date next to this code is the starting point for the 10-year clock.
The transcript will also show any events that suspended the collection period, such as codes related to an Offer in Compromise or bankruptcy. By reviewing these entries, a taxpayer can identify periods where the CSED clock was paused to calculate the final date.
Effect of an Expired Collection Period
The expiration of the Collection Statute Expiration Date has a significant effect on a tax liability. Once the CSED passes for a particular tax debt, the IRS permanently loses its legal authority to collect that tax through administrative means. This means the agency can no longer issue levies against wages or bank accounts, nor can it seize property or assets to satisfy the expired debt.
Furthermore, the expiration of the collection statute prevents the IRS from initiating a lawsuit to reduce the tax assessment to a court judgment. This is an important protection, as a judgment would otherwise grant the government a much longer period to pursue collection.
Any federal tax liens filed in public records related to the specific tax debt are also impacted. Upon the expiration of the CSED, these liens are automatically released, meaning they become unenforceable and no longer attach to the taxpayer’s property.