The 10-Year Tax Collection Statute and Why It Matters to You

During these stressful times, it is important to have a strategy on how to handle your finances, which unfortunately includes taxes for many Americans. As part of your strategy to tackle your past due taxes, you must know that the IRS has only 10 years from the date of assessment, not the date of filing, to collect a tax debt. That is all, 10 years. In most cases, after 10 years the debt becomes unenforceable. For example, if the 2009 tax return were filed on October 1, 2010, and the tax was assessed on October 10, 2010, the IRS would have until October 9, 2020, to collect that tax.


Frequently, the date of assessment is not the same as the date of filing. How do you know the date of assessment of a return that was filed several years ago? To start, you or your tax attorney should obtain what are called “Account Transcripts” from the IRS that list everything that has occurred with that particular tax year, including when the return was received, when the tax was assessed, the penalty and interest charged, and payments received. You can also ask the IRS for the “Mod A,” which will have an estimated CSED (Collection Statute Expiration Date). The IRS does not have to share the Mod A, but sometimes they do agree to share it.

The reason the statute of limitations is so important is that the amount of time remaining on the collection statute determines which solution you (or your tax attorney) should select to resolve your tax liability. The other key point about the statute of limitations is that certain actions on your part will toll, or freeze, the statute, preventing it from running. Such actions include the filing of an Offer-in-Compromise, filing a CDP request, requesting an installment agreement, and filing for bankruptcy. These actions prevent the IRS by law from taking collection action, and therefore stop the 10-year collection statute from running. The reasoning is that it would be unfair to allow the statute to run against the government while it is prevented from taking collection action. Otherwise, taxpayers can file multiple bankruptcy cases or submit multiple Offers-in-Compromise to run out the 10-year collection statute.

For what we do on our client cases, the time remaining on the collection statute is critical for us to advise the client about which of the collection alternatives make the most sense to resolve the client’s tax issue. For instance, if the liability is recent and most of the 10-year limitations period remains, an Offer-in-Compromise may make the most sense, as clients do not want the liability and tax hanging over their head for years to come. If, however, the tax liability is already older and not much more time remains on the 10-year limitations period, we sometimes have the taxpayer be deemed currently-not-collectable by the IRS, as this would allow the client to hold the IRS Collection Division at bay while the 10-year statute continues running on the old tax debt.

The tolling of the collection statute is why filing Offers-in-Compromise that have no chance of success accomplishes nothing but wasting the practitioner’s valuable time and the client’s limited resources. If you have been filing Offers-in-Compromise or if you filed bankruptcy on old tax debts, then it may be time to re-evaluate your strategy on how to tackle your tax issues. We can help you figure out how much time remains on the 10-year limitations period and how to proceed in resolving your tax debts.

Contact a Tax Attorney Atlanta — free one-hour consultation

If you are facing a tax dispute or audit, you probably have questions, and Gao Tax Law has the answers. Our mission is to help you obtain a fair resolution to your tax debt and to provide you with excellence, integrity, and personal attention every step of the way. This begins with a confidential free consultation for one hour, at no cost to you, where we will thoroughly examine the facts of your case and guide you through your options.

Located in the Cumberland-Vinings area, we serve individuals, families, and business owners throughout Metro Atlanta. Our goal is to make the tax resolution process as easy as possible for our clients, and as a partner with Regus and its network of workspaces, we can meet at a convenient location near you.

Your future is bright with Gao Tax Law Firm LLC. If you’re ready to begin your road to tax relief, contact us today, and we can create better solutions for you in no time.