What Is the Statute of Limitations for Federal Tax Liens?

A federal tax lien is the government’s legal claim against your property when you neglect or fail to pay a tax debt. The lien protects the government’s interest in all your property, including real estate, personal property, and financial assets. This action serves as a public notice to creditors that the government has a claim against your assets. The Internal Revenue Service (IRS) does not have an infinite amount of time to collect a tax debt, as its collection authority is limited by federal law.

The Collection Statute Expiration Date

Under the Internal Revenue Code, the IRS generally has 10 years to collect a tax liability from the date it is assessed. This 10-year deadline is known as the Collection Statute Expiration Date (CSED). Once this date passes, the IRS can no longer use administrative or judicial methods, such as a levy or wage garnishment, to collect the outstanding tax. The underlying tax liability essentially becomes unenforceable.

The 10-year clock begins on the date of assessment, which is the formal recording of the tax liability, not when a return is filed. For a tax debt arising from an audit or an amended return, a new assessment date is established for that specific additional amount of tax.

Understanding your assessment date is necessary for determining your CSED, and this date can be found on notices the IRS sends regarding a balance due. The most reliable method to confirm the assessment date is to request an official Tax Account Transcript from the IRS. This can be done online or by mailing Form 4506-T, Request for Transcript of Tax Return. The transcript will show the transaction date for the assessment, allowing you to calculate the 10-year CSED.

Circumstances That Extend the Collection Period

The 10-year collection period can be paused or extended by certain events, which is known as tolling the statute of limitations. When a tolling event occurs, the CSED clock stops running, and that amount of time is added to the end of the original 10-year period.

Filing for bankruptcy is a common event that suspends the collection timeline. The CSED is tolled for the entire period the bankruptcy case is pending, plus an additional six months after the case is discharged or dismissed.

Submitting an Offer in Compromise (OIC) also pauses the CSED. The collection clock stops when the IRS receives the OIC and remains paused until the offer is accepted, rejected, or withdrawn. If the offer is rejected, the CSED is further extended by 30 days to allow for an appeal, and if an appeal is filed, the clock remains stopped until the appeal is resolved.

Requesting an installment agreement suspends the CSED while the request is pending. Once an agreement is active, the 10-year collection clock continues to run as long as the taxpayer makes payments. The CSED is only paused again if the taxpayer defaults on the agreement. If an initial request is rejected, the CSED is suspended for 30 days following the rejection and for the duration of any appeal.

Other taxpayer actions can also extend the collection deadline. Requesting a Collection Due Process (CDP) hearing tolls the CSED until the hearing determination becomes final, including any court appeals. Filing a request for Innocent Spouse Relief also suspends the collection period for the spouse making the claim while the request is pending, plus an additional 60 days after a decision is made. If a taxpayer resides outside of the United States for a continuous period of at least six months, the CSED is suspended during their absence.

Lien Release After the Statute Expires

When the Collection Statute Expiration Date is reached, the tax debt becomes legally uncollectible, and the federal tax lien is extinguished by law. The IRS is required to issue a Certificate of Release of Federal Tax Lien within 30 days of determining the liability has become unenforceable.

While the release should be automatic, administrative oversights can occur. If more than 30 days have passed since your calculated CSED and the lien has not been released, you should take proactive steps. After confirming the date has passed and that no tolling events have extended it, you can submit a written request to the IRS Collection Advisory Group for your area, asking for the Certificate of Release.

Once you receive the Certificate of Release of Federal Tax Lien, it is good practice to file this certificate with the local and state recording offices where the original lien was filed. This ensures that public records are accurately updated, which is important for clearing your credit report and securing future financing.