IRS Statute of Limitations: Know Yours. It Could Help Your Back Taxes Case.

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By: Bill Henry
PublishedAug 5, 2019
5 minute read

IRS Statute of Limitations

If you owe the IRS, you should know there is an end to your tax problem. The IRS cannot come after the debt forever. There’s a powerful law called the IRS statute of limitations.

You may have heard lawyers talk about the statute of limitations as it relates to criminal trials. Well, just like certain crimes cannot be prosecuted forever, the same is true for the IRS in regard to collecting your taxes.

In IRS speak, that statute of limitations is called the CSED date or just CSED.

After your IRS statute of limitations passes, the IRS can no longer try to recover the debt. The CSED date seems like a pretty valuable piece of information for you to have, right? We think so. But guess what?

You have to ask the IRS about your statute of limitations. You won’t find it in the paperwork the IRS sends about your back taxes.

So where is this elusive IRS statute of limitations? The IRS has it in its computer system. But what if we told you the IRS gets CSED dates wrong? Yes, it happens, and many of those people end up paying money they shouldn’t have.

Taxpayers can sometimes use their IRS statute of limitations dates to their advantage. But you have to know about it, and it has to be correct.

That’s why Robinson & Henry tax attorneys independently verify every client’s IRS statute of limitations date, and we check it against the IRS’ calculations for accuracy.

We have beat the IRS and proven they can sometimes get the CSED date wrong. We may be able to help you, too.

Robinson & Henry, P.C. | initial assessments. Schedule yours today online or call (303) 688-0944.

Understanding Your IRS Statute of Limitations

So you got a letter from the IRS stating you owe back taxes. No matter where you are in the collections process – from notices to a lien – there’s one detail that every case has in common: the IRS statute of limitations, or CSED date.

Where Your CSED Date Comes From

Step One

When you file your federal taxes, the law requires the IRS to assess your return and record how much you owe.

The assessment period begins when you file your tax return. The IRS must evaluate your return within three years. Once that time frame is up, the IRS cannot assign you anymore taxes or penalties.

Most assessment periods begin on the date the return is filed. If you file your taxes early, it starts when taxes are generally due, April 15. If you file late, your assessment period begins when the IRS actually receives your return.

Here’s what the IRS looks for when it assesses your return:

  • Is the form actually a tax return?
  • Is there enough information to calculate the taxes?
  • Was there a real attempt to provide required information?
  • Is there an acknowledgement of perjury for giving false information?
Step Two

When the IRS completes its assessment of your return, it will be recorded. That creates your date of assessment. It is then that the proverbial IRS collections clock begins to tick.

The IRS has 10 years from the date of assessment to collect your tax liability. The collections clock stops on your CSED date. CSED stands for collection statute expiration date.

Here’s a simple example:

You file your return on April 15, 2020. The IRS records its assessment on Aug. 24, 2020. Your CSED date is Aug. 24, 2030.

During this 10 years, the IRS will charge interest on unpaid taxes, apply penalties, and potentially file a lien against you if your taxes are not paid.

Changes and Errors in Your CSED Date

Your date of assessment determines your CSED date, and your CSED date determines how long the IRS can collect your taxes. So it’s important these dates are correct.

If your IRS statute of limitations date is wrong:
  • The IRS can unlawfully have more time to collect back taxes.
  • You can pay more interest and penalties than you actually owe.
  • It’s possible for you to pay the IRS after the debt expires.

How Your CSED Date Gets Extended

Many people who are behind on their federal taxes don’t have the ability to pay the balance outright. Instead, taxpayers will pursue different options, such as a liability reduction, getting on a payment plan, or contesting the amount owed.

Anytime you take these actions, the IRS temporarily suspends your CSED date. Then it tacks on more time to your statute of limitations when the suspension ends. That means the IRS has even longer to collect on your debt.

Here’s a typical example:

A Taxpayer Applies for an Offer in Compromise 

Simply put, an offer in compromise lets a taxpayer offer less money than what they actually owe in the form of a lump sum payment. The CSED date is paused while the IRS decides whether to accept the offer.

Let’s say the taxpayer’s original CSED, or statute of limitations date, is Aug. 3, 2025. It took the IRS four months to review and reject the offer in compromise. Determined, the taxpayer appeals the decision. That takes three more months, and the CSED date remains paused.

The taxpayer loses their appeal. As a result, the collections clock starts up again. However, the taxpayer now how a new, extended IRS statute of limitations date. And it allows the IRS collect on their debt even longer.

IMPORTANT TO KNOW: The offer in compromise comes with an automatic 30-day CSED date extension.
Additionally, the IRS adds onto the new CSED date the length of time your statute of limitations is paused .

In this particular example, the IRS has eight extra months to try to collect the back taxes:

Original CSED Date: Aug. 3, 2025
Offer in Compromised Review takes 120 days
The Appeal process takes 90 days
Offer in Compromise CSED Extension: 30 days
New CSED Date: April 2, 2026

Other taxpayer actions that extend the CSED date:
  • Bankruptcy filing – 6 months plus time bankruptcy is pending
  • Installment agreements – 30 days plus time installment agreement is pending
  • Innocent spouse filing – 60 days plus time until a waiver is signed
  • Collection Due Process hearings – 90 days plus time until appeal is withdrawn or decided

As you can see, it’s possible to add years to your statute of limitations date, especially if you take numerous actions to try to reduce your debt. Additionally, these actions can lead to wrong CSED dates.

Therefore it’s critically important before you take any actions on your own to ensure they will benefit you. A knowledgeable tax attorney can provide valuable insight that could save you time and money.

Numerous Actions Can Lead to Wrong CSED Date

IRS employees manually enter specific codes for every action you take. Now, imagine multiple IRS employees working on your case. All it takes is one worker to input the wrong code to throw off your statute of limitations.

In 2017, the Treasury Inspector General for Tax Administration found that roughly 10 percent of Collection Due Process Program cases had wrong CSED dates. As a result of wrong CSED dates, many taxpayers received an unlawful collection time extension.

The Collection Due Process Program is for taxpayers who face an IRS lien or levy. It allows them to have their case independently reviewed to determine whether the lien or levy is warranted and appropriate. A levy action means the IRS can seize their assets.

In a separate report from 2013, The Treasury Inspector General found nearly 40 percent of Collection Due Process participants had wrong CSED dates.

The report found two errors typically cause the incorrect CSED date:
  • the code to begin the temporary CSED suspension was input incorrectly
  • the temporary suspension end date was wrong

Robinson & Henry Beat a Bad CSED Date

An IRS officer depleted one of our clients bank accounts to recover back taxes. However, there was some doubt as to whether this should have happened.

In question was whether the client’s statute of limitations had actually expired. If so, the debt should have not been collected.

Our attorney submitted a Freedom of Information Act request. Upon reviewing the client’s IRS transcript entries, we discovered the CSED date was, in fact, wrong.

We argued our case with high-ranking IRS attorneys. Our tax attorney was able to show information was missing from the transcript which resulted in the IRS inappropriately extending of the debt’s statute of limitations.

Ultimately, the IRS backed down before we took the case to court. As a result, the IRS returned the client’s funds, with interest.

Robinson & Henry Tax Attorneys | Improve Your IRS Debt Situation

Having IRS collectors after you is scary, especially if there’s a threat you could lose your assets. That’s why it’s important to speak to a skilled and experienced tax attorney.

CSED dates can be wrong. And bad actions to reduce your debt can leave you with no resolution in sight.

A good tax attorney will find out your CSED date
and base your options off of that.

Let our tax attorneys review your case. We can determine what course of action has the best chance of being accepted by the IRS. You may save thousands of dollars.

Schedule your initial assessment online or call (303) 688-0944. Freedom from IRS debt begins now.

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