Does Your Tax Debt Ever Expire—And If So, When?

Does Your Tax Debt Ever Expire—And If So, When?

• Mar 29, 2023

A battle with tax debt can feel never ending, and you may be wondering if there is any chance that your tax debt will ever just go away. While the odds of the IRS just wiping your tax debt clean are somewhere in the realm of zero, there is hope for getting rid of your tax debt. Keep reading to learn more about expiration dates on tax debts, and when your overdue taxes will become unenforceable to the IRS.

Does Tax Debt Expire?

The short answer here is yes—there is a statute of limitations on collecting tax debt. The date your tax debt expires is known as the Collections Statute Expiration Date, or CSED. For most tax debts, the CSED is ten years from the date that the tax debt is assessed. Your debt is considered “assessed” when you file your tax return or when a deficiency assessment is made. Essentially, as soon as you are alerted that you owe taxes, the ten-year countdown starts to when that debt will expire.

If you have tax debts from multiple years, each year’s debt will have its own CSED based on when it was assessed. If you’re not sure what the expiration dates would be for your past tax debts, you can request tax transcripts from the IRS to find the assessment date, and calculate your CSED from there.

Events that Extend the Expiration Date

As we just stated, the ten-year expiration date applies to most tax debts. However, there are factors that can extend your CSED. So, when calculating your CSED, you’ll need to look not only at the assessment date of your tax debt, but consider any circumstances that might extend that expiration date. These include the following:

• Declaring bankruptcy
• Requesting a Collection Due Process hearing
• Living overseas for six consecutive months or more
• Requesting innocent spouse relief
• Submitting an installment agreement request
• Submitting an offer in compromise

All applicable periods would be tacked onto the end of your CSED. For example, if you lived out of the country for 18 months during the 10-year window after your tax was assessed, you would need to add 18 months to the end of that time period to determine your CSED.

What Happens When Your CSED Is Approaching?

You might think that the expiration for your tax debt drawing nearer is a good thing. After all, there’s now a light at the end of the tunnel, right? However, the IRS may become more aggressive in their collection attempts when your CSED is drawing nearer. They may pursue more forceful means of collecting on that tax debt, such as garnishing your wages, placing tax liens on your property, or levying your bank accounts. The IRS is far more likely to forcibly seize assets near the end of the enforceable collection period, which can have serious consequences for you financially.

If the collection period for your tax debt has passed, and the IRS has not collected on it, then you are no longer required to pay on that debt, and they have no legal right to pursue collections on it. However, it’s important to be aware that getting to your CSED without significant collection actions from the IRS is very unlikely.

How Else Can You Stop Collections from the IRS?

If you don’t want to wait ten years for your tax debt to go away, there are other ways in which you can ease the burden of IRS collection efforts. One option is to request that your account be placed in Currently Not Collectible status. This puts a temporary hold on all collection actions from the IRS, so that you can have some breathing room and work to get your finances back in order before pursuing other settlement options.

If you need more than just a little bit of time and a hold on collection actions, then you can pursue an installment agreement or offer in compromise. As mentioned earlier, submitting these settlement requests does extend your CSED. However, if you’re approved for an IRS tax settlement program, you can get your tax debt under control much sooner than waiting for the statute of limitations to expire.

Can’t just sit around and wait for your tax debt to expire? The IRS Advocates can help. Contact us today to schedule a consultation with our tax experts. We’ll sit down with you to discuss your debt and your current finances to determine a settlement option that will work for you, so you can take control of your tax debt again.