Optima Tax Relief’s Chief Tax Officer and Lead Tax Attorney, Phil, answers a common concern: “I got a letter from the IRS saying I owe taxes from more than 10 years ago. Can they still collect?” The answer is yes—and it all comes down to something called the Collection Statute Expiration Date (CSED).
What Is the CSED?
The CSED is the timeframe the IRS has to collect a tax debt. In most cases, the IRS has 10 years from the date a tax is assessed to collect what you owe. Once that period expires, the debt is generally no longer collectible.
Why the CSED Matters
The CSED can actually work in your favor. If the collection period has expired, or is close to expiring, you may not be required to pay the full balance. That’s why it’s important to verify the accuracy of your CSED before making any payments.
10 Years Isn’t Always 10 Years
One key detail taxpayers often overlook is that the 10-year clock doesn’t always run continuously. Certain actions, like filing for bankruptcy, submitting an offer in compromise, or requesting a payment plan (the clock pauses while the IRS reviews the request, but continues running once the plan is approved and active), can pause or extend the collection period. This means the IRS may still have time to collect, even if the debt is more than a decade old.
When the Clock Starts
The collection period typically begins when the tax is assessed, either when you file your return or when the IRS files one on your behalf. You generally don’t want the IRS filing your taxes for you, as it can lead to higher balances and fewer protections.
Know Your Timeline
Understanding your CSED is critical to managing your tax debt. Reviewing your timeline and knowing where you stand can help you make informed decisions and avoid paying more than you actually owe.
If you need tax help, contact us today for a Free Consultation