Cracking The CSED Code: Unraveling The Mystery Of IRS CSED

What is CSED? CSED stands for Collection Statute Expiration Date. It refers to the maximum amount of time the IRS (Internal Revenue Service) has to collect on tax debts. Generally, the IRS has 10 years from the date of assessment of a tax liability to collect the debt. After the CSED, the IRS is legally prohibited from collecting the debt.

It's important to note that certain actions can extend the CSED, such as filing for bankruptcy, submitting an Offer in Compromise, or signing a waiver agreeing to extend the collection period. Therefore, it's crucial to carefully consider any actions you take and consult a tax professional if you have unpaid tax debts approaching their CSED.

The Collection Statute Expiration Date (CSED) is a crucial concept in U.S. tax law.

It refers to the IRS statute of limitations on collections or the expiration date for the IRS to legally collect a tax debt from a taxpayer.

Once the CSED passes, the IRS loses its legal right to collect the debt, and it becomes unenforceable. irs statute of limitations on collections

The CSED is determined based on various factors and events, including:

1. Date of Assessment: The CSED clock usually starts ticking from the date the IRS assesses the tax liability. Assessment occurs when the IRS officially records the taxpayer's liability in its system.

2. Tax Returns: If you file a tax return before the IRS assesses the tax, the CSED is generally three years from the date of filing for that tax year.

3. Extension Agreements: If you've entered into an extension agreement with the IRS, the CSED could be extended. This often happens when you agree to give the IRS more time to collect the debt.

4. Bankruptcy: If you file for bankruptcy, the CSED is generally suspended for the duration of the bankruptcy proceedings and for a period after the bankruptcy is concluded.

5. Offers in Compromise: The CSED is suspended while the IRS considers an Offer in Compromise (OIC) and for an additional 30 days after the OIC is rejected or returned.

6. Collection Activity: Certain collection activities, such as the filing of a Collection Due Process (CDP) request or certain installment agreements, can temporarily suspend the CSED.

It's important to note that the CSED can be complex to calculate and can vary depending on the specifics of your situation. Additionally, the IRS has the ability to extend the CSED under certain circumstances, and errors or fraudulent activities can also affect the expiration date.

If you're concerned about your tax debt and the CSED, it's recommended that you consult a tax professional, such as a certified public accountant (CPA) or tax attorney. They can help you understand your specific situation and guide you through the options available to address your tax debt.

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Do federal tax liens expire?

The answer is yes!  The Collection Statute Expiration Date (CSED) marks the end of the collection period, the time period established by law for the IRS to collect taxes.

The Collection Statute (CSED) or IRS statute of limitations on collections Expires After 10 Years.

The collection period, which refers to the time period allowed by law for the IRS to collect taxes, expires on the Collection Statute Expiration Date  which is typically ten years from the date of the assessment.

Tax assessments that have a specific Collection Statute Expiration include, but are not restricted to:

  • Original tax assessments from voluntarily filed returns
  • Tax assessments arising from amended return filings
  • Substitute for Return tax assessments made by the IRS
  • Audit assessments
  • Civil penalty assessments

The IRS’s Time to Collection Statute Expiration Date can be Suspended and/or Extended.

Certain circumstances have the potential to delay or lengthen the original ten-year Collection Statute Date.

In general, when the IRS is unable to collect tax, the Collection Statute Expiration Date is suspended. The term it is suspended for extends the time the IRS has to collect. In other words, you have a maximum of ten years to collect after the first ten years. Although there are rare exceptions, the IRS typically refrains from taking levy action while the collection period is stopped.

The collection period is extended by the IRS when they are legally permitted to add extra time to the initial ten-year collection period. This allows the IRS to continue collecting during the extended period.

Typical Events That May Have an Impact on the Collection Statute

A number of statutes have an impact on the CSED. More than one action may tolled the collection period's end. The time for multiple events is not added more than once, where one event may overlap another one because overlapping conditions take place simultaneously.

The initial ten-year collection period is postponed or put on hold during the time that you are filing an Installment Agreement (IA). Until an IA may be reviewed, established, or the request is withdrawn or rejected, an IA request is usually in pending status.

The collection period is suspended for 30 days if the proposed IA is denied. Similar to this, the collection period is halted for 30 days if you fall behind on your IA payments and the IRS decides to terminate the IA.

Last but not least, the collection period is suspended from the time it begins to run until the day the appealed decision becomes final if you use your right to appeal either an IA rejection or termination. Please see Topic 202.

The collection period is stopped while your bankruptcy is still pending if you file for bankruptcy. A bankruptcy is often considered pending from the moment a petition is filed until it is discharged, dismissed, or closed. Upon the conclusion of the bankruptcy, the collecting time is further extended for a further 6 months. Check out Publication 908.

The collection period is suspended if you submit an Offer in Compromise (OIC), from the time it is pending to the time it is accepted, returned, withdrew, or refused. If your offer is turned down, the collection period will be postponed for an additional 30 days and for the duration of the appeal process if you decide to appeal the denial. Please see Topic 204.

When the IRS receives a request for a Collection Due Process (CDP) hearing, the collection period is put on hold until either the taxpayer withdraws the request or the CDP determination is final, including any court appeals. The collecting period is extended to 90 days from the date of the final determination if there are less than 90 days until the CSED at the time the determination becomes final. Please consult Publication 1660.

If you file a "innocent spouse" claim, only the requesting spouse's collection period stops from the date the claim was filed until the earlier of the dates a waiver is filed, the 90-day deadline for petitioning tax court expires, or, if tax court is requested, the date the decision becomes final. In either case, the collection period is also extended by an extra 60 days. Observe Topic 205.

The IRS is prohibited from starting an administrative or judicial collection process for the assessed debt once a particular collection period has passed.



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