Do Back Taxes Expire? How IRS Time Limits Work

Taxpayers often wonder if their tax obligations ever disappear. While the Internal Revenue Service (IRS) has time limits to assess and collect taxes, these limits are not absolute. Understanding these timeframes is important for managing tax responsibilities, as various situations can affect how long the IRS pursues unpaid taxes.

Understanding Tax Assessment Time Limits

Assessment refers to the formal recording of a taxpayer’s tax liability by the IRS. Once assessed, a tax becomes a legally enforceable debt. The IRS generally has three years from the date a tax return is filed to assess additional tax. This three-year period begins on the later of the tax return’s original due date or the actual submission date.

Specific circumstances can extend this assessment period. For instance, if a taxpayer substantially understates gross income by more than 25% on a return, the IRS has six years to assess the tax.

If a required tax return is never filed, the statute of limitations for assessment does not begin. This means the IRS can assess tax for an unfiled return at any point. Similarly, if a taxpayer files a fraudulent tax return, there is no time limit for the IRS to assess the correct tax.

How Long the IRS Has to Collect

Once a tax is assessed, a separate time limit applies to how long the IRS has to collect that debt. This is known as the Collection Statute Expiration Date (CSED). The IRS generally has ten years from the date of assessment to collect the tax.

This ten-year period begins only after the tax liability is formally recorded. For example, if a tax return was filed on April 15, 2022, and the IRS assessed additional tax after an audit on October 1, 2023, the ten-year collection period would start on October 1, 2023.

If the IRS does not collect the tax within this ten-year period, the tax liability is generally extinguished. This expiration provides a definitive end point for collection efforts, assuming no factors extend or suspend the period.

Factors That Extend or Suspend Time Limits

Several actions or circumstances can extend or suspend the time limits for both tax assessment and collection. Back taxes may not expire as a taxpayer might expect.

Waiver of the statute of limitations: During an audit, the IRS may request a taxpayer sign Form 872, “Consent to Extend the Time to Assess Tax,” to provide more time for examination.
Offer in Compromise (OIC): Submitting an OIC, an agreement to settle a tax liability for a lower amount, suspends the collection statute while processed, for an additional 30 days after rejection, and throughout any appeal period.
Bankruptcy: Entering bankruptcy suspends the collection statute while a taxpayer is undergoing proceedings, plus an additional six months after the case concludes.
Innocent Spouse Relief: A request for Innocent Spouse Relief can suspend collection activities and the statute of limitations for the spouse seeking relief.
Collection Due Process (CDP) hearing: Requesting a CDP hearing suspends the collection statute while the hearing is pending and during any appeal.
Taxpayers living abroad: If a taxpayer leaves the U.S. for a continuous period of at least six months, the collection statute is suspended for that time, not expiring until at least six months after their return.
Military service: Service in a combat zone or during a contingency operation can suspend collection activities and the statute of limitations for the service member.
Taxpayer Assistance Order (TAO): Requesting a TAO from the Taxpayer Advocate Service, which aims to resolve significant hardship, also suspends the applicable statute of limitations.