Collection Statute Expiration Date: Explained

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The Collection Statute Expiration Date is when a creditor loses its right to collect from you. This statute of limitations is set by the state in which the debt was incurred, and it varies depending on what type of debt it is.

For example, the Collection Statute Expiration Date for an auto loan may be much longer than one for credit card debt.

Continue reading to learn more about Collection Statute Expiration Date (CSED).

When it comes to tax debt, timing is crucial. You may not be aware that tax debt can vanish, but each tax assessment has an expiration date set when it is created.

The IRS defines a collection statute expiration date (CSED) as the date a debt is canceled by default after it has been outstanding for a set length of time, usually two to five years. A collection statute expires when you do not pay your taxes in full.

What Is the IRS Statute of Limitations on Tax Collection?

The IRS’s statute of limitations on tax collection is usually six years. However, there are a few exceptions to this rule, such as if the tax was not submitted or paid within three years after being due.

If you’ve been a victim of something like this and need assistance making sense of your IRS compensation alternatives, please call now for a free consultation on your situation.

What Is The Collection Statute Expiration Date (CSED)?

The Collection Statute Expiration Date (CSED) is when an unpaid debt becomes legally collectible.

The statute of limitations for debt will vary by jurisdiction, but typically there are time limits within which creditors can take legal action to enforce their debts. When these deadlines have been reached without any payment being made, the collection status changes from “open” to “collectible.”

Once this occurs, subsequent letters sent by mail or otherwise delivered to the address on record with the creditor may be treated as legally valid demands for payment under state law if they are not returned undelivered due to non-response or failure of delivery within 30 days after such mailing date.

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However, it’s essential to understand that there can be some twists and turns on the way to your CSED. Here’s a look at the basics:

  • The Collection Statute Expiration Date (CSED) is ten years in most cases.
  • Any remaining tax debt that has not been paid off within the statutory period is forgiven. The tax obligation was assessed marks the beginning of a statutory term. 
  • By default, a statutory period begins on the date the IRS generates a Substitute for Return (SFR) on behalf of a taxpayer who hasn’t filed.

Steps to prevent IRS collections after CSED Expired

The collection statute of limitations (CSED) does not apply to all tax debts; in certain instances, debt will not automatically expire after ten years.

There are a few steps that you can take to prevent the IRS from collecting on your tax debt after the CSED expires:

  • File an Offer in Compromise
  • Request a Collection Due Process Hearing
  • Request an Innocent Spouse Relief
  • File for Bankruptcy

Furthermore, if you travel out of the country for an extended time, your tax debt may be prolonged. Some tax debt will always remain outstanding; for example, the IRS will not waive tax debts that arise due to someone being convicted of fraud.

How to Find Out Your IRS CSED?

The CSED is the statute of limitations for the IRS to collect your tax debt. It’s ten years from the date of assessment. So, you can find out your CSED by looking up the date of assessment on your most recent tax bill or notice from the IRS.

It’s also possible to obtain a more formal response by requesting a transcript of your IRS account for information needed to make a calculation based on when the assessment and filing dates were determined.

Does the IRS Forgive Tax Debt After ten years?

There is no definitive answer as the rules around tax debt forgiveness can change from year to year. Generally speaking, the IRS will not forgive tax debt if it is older than ten years.

However, there may be exceptions depending on your situation. It is best to speak with an experienced tax professional for more information.

How Long Can the IRS Collect Back Taxes?

The IRS can collect back taxes for up to 10 years. However, some extenuating circumstances may limit the period in which the IRS can collect back taxes.

For example, if a taxpayer files for bankruptcy, the IRS cannot collect back taxes from that taxpayer.

Additionally, if the IRS determines that a taxpayer is suffering from financial hardship, the IRS may limit the amount of time it collects back taxes from that taxpayer.

Here’s a list of circumstances that almost always extend CSED on debt:

  • Bankruptcy. 
  • Living abroad for six months. 
  • Military deferment. 
  • A Collection Due Process (CDP) hearing. 
  • A taxpayer assistance order. 
  • Installment agreement. 
  • Innocent spouse relief. 
  • Offer in Compromise (OIC).

It’s also possible that the IRS will bring a case against a taxpayer in extremely rare circumstances. Your statue of limitations will be halted in this situation. It’s also vital to note that, if tax fraud is proved, your debt may never go away.

The main takeaway is that CSED may be taken into consideration as part of a tax resolution strategy. When the proper conditions and understanding of tax law are present, it is only part of an effective approach.

If a debt collector takes your tax return does that restart the statute of limitations on your debt?

No. The statute of limitations for collection agencies is generally six years.

A debt collector can’t take your tax return without your explicit permission, so this would be illegal regardless of when the original delinquency occurred.

But even if they did have legal access to your records (which they don’t), you’re still protected under both federal and state law against disclosure of any information about income tax returns by third parties like collectors.

So long as you’ve filed an accurate return and paid all your taxes according to what’s on it (and aren’t hiding money from the government).

Need help with the statute of limitations on IRS collecting back taxes?

We connect you with tax professionals who are ready to answer all of your questions about the statute of limitations on IRS collecting back taxes.

The first step is often requesting records to get an accurate end date for your debt. Next, they’ll help you explore what steps should be taken to obtain tax relief options that apply in your case legally.

Our experience shows us that taxpayers should never act on assumptions about CSED because miscalculations can often lead to more significant problems with the IRS.

For more than 30 years, our tax professionals have been assisting clients with IRS statute of limitations and relief alternatives. Contact us immediately to arrange a consultation.