How Far Back Can the IRS Collect Unpaid Taxes?

The Internal Revenue Service (IRS) has a defined period to collect unpaid taxes, known as the Collection Statute Expiration Date (CSED). This CSED marks the deadline after which the IRS can no longer legally pursue a tax debt. While standard rules apply, certain actions and circumstances can significantly alter this collection period.

The Standard Collection Period

The IRS generally has 10 years from the date a tax is assessed to collect the debt. This 10-year period applies to original tax amounts, additional taxes from amended returns or audits, civil penalties, and accrued interest. Each tax assessment has its own Collection Statute Expiration Date.

Tax assessment is the official recording of a tax liability on IRS records. When a tax return is filed, the IRS assesses the tax, formalizing the amount owed. For timely filed returns, the assessment date is typically around the tax due date. If a return is filed late, the 10-year period begins when the IRS processes it.

Assessment establishes the IRS’s legal right to collect the tax. Without a formal assessment, the IRS cannot pursue collection actions like placing a lien or issuing a levy.

Factors Affecting the Collection Period

While the standard period is 10 years, various events can extend or suspend the Collection Statute Expiration Date (CSED). When the statute is suspended, the clock stops running, and that time is added to the end of the original 10-year period. This ensures the IRS still has the full 10 years to collect once the event concludes.

Offer in Compromise (OIC)

Submitting an Offer in Compromise (OIC) to settle a tax debt for a lower amount can pause the collection period. The statute of limitations is suspended while the OIC is pending, and for an additional 30 days after a decision is made, or longer if an appeal is filed. The OIC process can take several months, potentially adding a significant amount of time to the collection period.

Collection Due Process (CDP) Hearing

Requesting a Collection Due Process (CDP) hearing also suspends the collection statute. This suspension lasts from the date the IRS receives the CDP request until the determination becomes final, including any judicial review.

Installment Agreement (IA)

Entering into an Installment Agreement (IA) to pay taxes over time can also affect the CSED. The statute is suspended while the installment agreement request is pending, and for an additional 30 days after a denial or termination. If the IRS requests a waiver to extend the collection statute in conjunction with an installment agreement, this extension can add up to six years to the period.

Bankruptcy Filing

A bankruptcy filing by the taxpayer suspends the collection period due to an automatic stay. The statute is paused for the duration of the bankruptcy proceedings, plus an additional six months after the case is closed or dismissed.

Living Outside the U.S.

If a taxpayer lives outside the United States continuously for at least six months, the collection statute can be suspended. The clock stops running during this period and may be extended for at least six months after the taxpayer returns to the U.S.

Tax Collection Waiver (Form 900)

Taxpayers can voluntarily agree to extend the collection period by signing Form 900, Tax Collection Waiver. This is often requested by the IRS in situations involving partial payment installment agreements, allowing more time for the debt to be paid.

Circumstances Without a Collection Limit

In certain situations, the Internal Revenue Service (IRS) faces no statute of limitations on collection, meaning it can pursue the tax debt indefinitely. These exceptions are typically tied to taxpayer actions that involve dishonesty or a failure to comply with fundamental filing requirements. This applies when a taxpayer files a fraudulent tax return.

If a required tax return is never filed, the IRS retains the right to collect the tax at any point in the future. The 10-year collection clock only begins once a return is assessed, so a failure to file means the clock never starts for that period. The IRS can also prepare a Substitute for Return (SFR) on behalf of the taxpayer, which then initiates the collection period.

Willful attempts to evade tax, which involve active concealment or deceptive actions to avoid paying taxes, also eliminate the collection statute of limitations. This is a broader category than simply filing a fraudulent return and can encompass various deliberate acts.

Actions After the Collection Period

Once the Collection Statute Expiration Date (CSED) passes, the IRS can no longer legally pursue administrative or judicial actions to collect the tax debt. This means the IRS cannot initiate new levies, such as wage garnishments or bank account seizures, nor can it place new tax liens on property. The tax debt is considered “uncollectible” from the IRS’s perspective, and the agency will write it off internally.

Any existing federal tax liens associated with the expired debt generally self-release after the 10-year statute of limitations. While the lien may expire, it is advisable for taxpayers to request a Certificate of Release from the IRS to ensure the lien is officially removed from public records, which can impact credit and financial transactions. If a levy on future income was initiated before the CSED expired, the IRS may continue to receive payments from that levy even after the CSED.

It is important to understand that the expiration of the collection statute does not erase the underlying tax debt itself; rather, it renders it legally uncollectible by the IRS. The debt still exists on paper, but the IRS loses its legal authority to enforce payment. Taxpayers who have made payments after the CSED may be able to request a refund for those amounts.