Collection Statute Expiration Date

Can the IRS collect on your old tax debt?

While it may seem like it, the IRS does NOT in fact have an unlimited time to collect tax debt from you — and the IRS has little or no interest in telling you this. The IRS does not have the legal authority to collect tax debt that is more than ten years old. This is useful information for any tax debt outstanding for more than 10 years, or about to be that old; and useful to think about if you are going to structure a payment plan for tax debt to be paid off over a period of years.

The key date to calcuate is the “Collection Statute Expiration Date” for the various elements of your tax debt. If you owe back taxes for a number of years, you have to figure this out separately for each year’s tax liability, and the interest and penalties that relate to each year’s tax debt. The starting point for each year’s tax debt is when the tax was for certain assessed. This could be when you filed that year’s tax return. If you didn’t file a tax return, it would be whenever the IRS assessed your tax for that year with a tax return they file on your behalf called a “Substitute for Return” (SFR). Another possibility is that you were assessed additional tax if you were audited. Basically, once the IRS has a number they can point to, and have told you about, the collection statute clock starts for that increment of tax debt. For each year, the IRS Statute of Limitations expires on the last day of the tenth year.

BestTaxPro can review your IRS tax account record and transcript to figure all of this out for you, first, so you don’t pay taxes, interest and penalties that are no longer legally collectible, and then to determine a tax resolution strategy for any of your other tax debt based on that information.