Every tax assessment has a statute of collection (CSED) due date. Section 6502 of the Internal Revenue Code states that the length of the collection period after the evaluation of a tax liability is 10 years. The expiration of the collection law ends the government's right to request the collection of liability. In general, the IRS has 10 years after the date of the evaluation to collect back taxes and tax-related charges, although there are some exceptions.
This 10-year limit is known as the Tax Collection Expiration Date (CSED) and frees tens of thousands of Americans from their tax obligations each year. In short, the statute of limitations for federal tax debt is 10 years from the date of tax assessment. This means that the IRS must write off the tax debt after 10 years. However, there are a few things to keep in mind.
A common belief that many taxpayers have is that the IRS cannot take any action against them if it has been 10 years or more since they last filed a tax return. It's true that the IRS can only collect tax debts of 10 years or less. However, those 10 years don't begin when you refuse, either accidentally or deliberately, to file your return. The bankruptcy procedure alone can take one year and, once that period has elapsed, the IRS waits an additional six months after the end of the procedure to begin its collection procedures (and, consequently, the collection stopwatch).
For many years, the IRS commitment offer form (Form 65) contained a provision stating that, when submitting the offer, the taxpayer agreed to exempt from the statute of limitations for as long as the Service was considering the offer, plus an additional year. It is strongly recommended that you contact tax professionals who have experience in helping people negotiate tax relief with the IRS, as they can better advise you on when your record is likely to be submitted to your CSED and whether you should contact the IRS given your current circumstances and position or, if possible, wait for it to happen. He specializes in civil and criminal tax disputes and litigation, IRS collection issues, and the tax aspects of bankruptcy and divorce. Once the evaluation is made, the IRS generally has 10 years to take legal action and collect the tax debt using the considerable resources at its disposal, including taxes and wage garnishes.
Therefore, even though the RRA has the legislative authority to automatically extend the statute of limitations for the duration of an installment payment agreement, it appears that the IRS preferred to rely on its traditional method of extending the law through signed exemption agreements. You should note that this 10-year period for collecting a balance due from the IRS may be extended in certain cases. Generally, under article 6502 of the IRC, the IRS will have 10 years to collect an obligation starting from the date of the evaluation. The IRS can only request that you sign the exemption if it is accompanied by a submitted installment payment agreement.
It remains to be seen how the IRS will implement this part of its diminished authority to request law-exemption agreements. Even so, the bankruptcy court may allow the IRS to claim some assets to settle your tax debt. First of all, there is no way to reduce the IRS statute of limitations by filing your return before April 15. However, when advising clients or negotiating with the IRS on tax exemptions and other issues affected by these rules, it would be best to follow the obviously IRS-friendly analysis conducted by the Office of the Chief Counsel, unless and until the courts determine that another interpretation is more appropriate. .