How Long Do I Have to Pay Back Taxes?

The Internal Revenue Service (IRS) has a limited timeframe, known as a “statute of limitations,” to collect unpaid taxes. Various actions and circumstances can alter how long the IRS has to pursue a debt.

Standard Period for Tax Collection

The period for the IRS to collect tax debt is 10 years, known as the Collection Statute Expiration Date (CSED). The CSED is the deadline after which the IRS loses its legal authority to collect a tax liability.

The 10-year collection period begins on the date the tax is assessed. Assessment occurs when the IRS records a taxpayer’s liability, such as when an original or amended return is filed, or an audit determines additional taxes are due. If a return is filed before its due date, the period starts from the due date. If filed late, it begins when the IRS processes the return.

Each tax assessment has its own CSED. If a taxpayer owes taxes for multiple years or from different assessment events, each will have a distinct expiration date. Once the CSED is reached, the tax debt is legally uncollectible.

Actions That Extend the Collection Period

Many actions can prolong the 10-year collection period. These events either suspend the collection clock, meaning it pauses and resumes later, or extend it by adding time.

Offer in Compromise (OIC)

An Offer in Compromise (OIC) is a proposal to settle a tax liability for less than the full amount owed. Submitting an OIC suspends the collection statute while the offer is pending review. This suspension continues for 30 days after the offer is accepted, returned, withdrawn, or rejected. If the OIC is rejected and appealed, the collection period is suspended throughout the appeal.

Installment Agreement (IA)

Entering an Installment Agreement (IA), a payment plan, impacts the CSED. The collection period is suspended while an IA request is pending. If rejected, the CSED is extended for 30 days. If the IRS proposes to terminate an IA due to default, the collection period is suspended for 30 days. Appealing an IA rejection or termination suspends the CSED until the appeal is resolved.

Bankruptcy

Filing for bankruptcy triggers an automatic stay, preventing IRS collection actions. The collection statute is suspended during the period the bankruptcy case is active. Once the case concludes, the CSED is extended for six months.

Tax Court Petition

Petitioning the Tax Court to dispute a tax liability affects the CSED. The collection period is suspended from the date the petition is filed until the Tax Court’s decision becomes final. 60 days are added to the CSED after the court’s decision.

Collection Due Process (CDP) Appeal

Requesting a Collection Due Process (CDP) appeal, initiated in response to an IRS notice of intent to levy, suspends the collection statute. The CSED is suspended while the CDP appeal is pending and continues for 30 days after the IRS issues a determination.

Living Abroad

If a taxpayer lives outside the United States for six months or more, the CSED is suspended for that period. The collection clock stops running while the taxpayer is abroad and resumes upon their return. The CSED is extended by at least six months when the taxpayer returns to the United States.

Innocent Spouse Relief

Claims for innocent spouse relief suspend the collection period. The CSED is suspended while the claim is under review. The suspension lasts until a waiver is filed or until the 90-day period to petition the Tax Court expires. If a Tax Court petition is filed, the CSED is suspended until the court’s final decision plus 60 days.

Military Service

Military service affects the collection period. For service members in a combat zone or contingency operation, the collection statute is suspended for the period of service plus 180 days after leaving the zone. Under the Servicemembers Civil Relief Act, the CSED is suspended for the period of military service plus 270 days.

Situations Without a Collection Time Limit

In certain circumstances, the IRS has an indefinite period to collect taxes. These situations are exceptions to the 10-year rule.

Unfiled Returns

If a required tax return is never filed, there is no statute of limitations for the IRS to assess or collect the tax. The IRS can indefinitely determine and collect taxes for unfiled years. While the IRS focuses on obtaining returns for the last six years, it can pursue older unfiled returns.

Fraudulent Returns

If a taxpayer files a fraudulent tax return, the statute of limitations does not apply. The IRS can pursue collection of taxes related to a fraudulent return. The burden is on the IRS to prove the return was fraudulent. This unlimited timeframe applies even if a non-fraudulent amended return is later filed.

When the Collection Period Ends

When the Collection Statute Expiration Date (CSED) is reached, the IRS’s legal authority to collect a tax debt expires. The IRS can no longer pursue collection actions, and the taxpayer is no longer liable for that debt.

Upon the CSED’s expiration, IRS collection actions become unenforceable. The IRS can no longer issue levies on wages or bank accounts, nor seize property. Associated tax liens disappear, along with accrued interest and penalties. If a taxpayer unknowingly makes a payment on an expired tax debt, they can request a refund.