IRS Statute of Limitations

What Is the IRS Collections Statute of Limitations?

When you owe back taxes for several years, or you have currently not collectible (CNC) status, you’re probably wondering how long the IRS can collect back taxes. In most cases, the IRS only has 10 years to collect. Once the 10 years passes, the IRS can no longer collect the debt, and in turn, you no longer have to worry about the agency seizing your wages or assets.

The IRS expects you to file and pay your taxes on time each year. When you fail to submit a tax return or if you don’t pay your tax debt, you put yourself at risk for IRS-enforced collections. This can lead to serious financial hardships for you and your family. 

Key Takeaways

• There is a 10-year statute of limitations for the IRS to collect back taxes.
• The IRS has 10 years from the return due date or the filing date to collect the tax.
• The end of the collection period is called the Collection Statute Expiration Date (CSED).
• The clock doesn’t start until you file a return or the IRS asseses tax against you.
• There are certain events that pause the clock on the collection statute. 
• The extra time gets added to the end.
• You can find the CSED for your tax debt on your online IRS account.
• If your account is marked as noncollectible until the CSED, you will not have to pay. 
• With a partial payment installment agreement, you make payments until the CSED and the remaining balance expires.

Luckily, the IRS has a limited amount of time to assess taxes and collect on delinquent tax debts, with varying deadlines. There is an IRS statute of limitations on collections — this means that once these expiration dates pass, the IRS can no longer assess or collect the tax debt. 

This overview walks through the statute of limitations on IRS taxes and collection. You can also get your questions answered immediately by contacting the tax attorneys at the W Tax Group.

When Will the IRS Come After You?

If you haven’t filed or paid taxes in many years, and have never been contacted by the IRS, you may be thinking that you don’t have anything to worry about. Or, you may be worried that the IRS is going to come and find you for all your unpaid taxes. Each case is different, but you usually cannot avoid IRS collections.

The IRS doesn’t let a lot of unpaid taxes go past the expiration date, which is 10 years for collections actions. Even if the agency has ignored you for years, they’re likely to start collecting as this deadline approaches. 

However, the time limit isn’t always cut and dry. You have to understand when the clock starts ticking and which events can pause the clock or extend the statute of limitations, which is common.

What Is the IRS Statute of Limitations? 

In general, a statute of limitations is a law (statute) that limits how far back you can go when assessing a penalty, charging someone with a crime, or taking other actions. 

The IRS statute of limitations is the amount of time the agency has to take a certain action against you, including: 

• Assessing tax
• Auditing returns 
• Issuing refunds
• Collecting tax

How Long Is the Statute of Limitations for IRS?

The IRS statute of limitations varies depending on the issue at hand. Here are the three most significant time frames and a brief explanation of when they apply:

• Refund statute expiration date (RSED) — Three years. You have three years from the original due date of your tax return to file or amend it and receive a refund. You can file or amend after that date, but you cannot receive a refund. 
• Assessment statute expiration date (ASED) — Three years but potentially longer. The IRS has three years after the tax return due date or the date the return was filed to audit the return and assess a tax against you. If you underreported your gross income by 25% or more, the IRS can assess taxes six years back. If you committed tax fraud or evasion or if you didn’t file, the IRS can go back an unlimited amount of time. 
• Collection statute expiration date (CSED) — 10 years. The IRS has 10 years to collect taxes after they have been assessed. This deadline can be changed for a few different reasons, which are discussed in the following sections. 

How Far Back Can the IRS Collect Taxes?

Typically, the statute of limitations on tax debt collection is 10 years. The IRS has a decade to collect a tax debt after it has been assessed. After this time, the IRS can no longer forcibly collect the tax debt. 

For instance, if more than 10 years have passed and the statute hasn’t been extended for any reason, the IRS can no longer garnish your wages or file a federal tax lien against you. 

But remember, this isn’t the same as when the IRS forgives tax debt. With the statute of limitations, the tax liability still exists, but the IRS cannot collect it. 

What Is the Statute of Limitations on Back Taxes?

The statute of limitations to collect back taxes is 10 years as noted above. However, to assess a tax against you, the IRS has three years from the date you filed the tax return. For instance, say that you file an income tax return on April 15, 2024. The IRS has until April 15, 2027, to assess a tax against you. This is the ASED.

If you didn’t file a tax return, the IRS doesn’t have a deadline. The IRS can go back and assess a tax against you at any time. Additionally, if you commit fraud, the three-year limit doesn’t apply. The IRS can go back an unlimited amount of time in these cases. 

There’s also a time limit that falls in the middle of these extremes. Say the IRS audits one of your returns and discovers that you underreported your gross income by a substantial amount, typically defined as 25% or more. In this case, the agency can go back six years to look at your other returns and assess taxes against you.

What Is the IRS Statute of Limitations for Audits?

Tax audits are not common, but they do happen if the IRS has found discrepancies in information or your tax return was flagged. However, the agency only has a certain time period to conduct an audit.

The audit statute of limitations works just like the assessment statute. It overlaps because when the IRS audits your tax return, they can assess taxes against you. Again, the deadline is usually three years after you file or the due date for filing. However, the IRS can go back further if you substantially understate your income or in cases of fraud.

What Is the Tax Evasion Statute of Limitations?

As stated, the IRS has three years after you file your returns to audit them. This is how many cases of tax evasion or fraud are found — through audits. However, if you left off more than 25% of your taxable income, the statute of limitations is six years.

The SOL is six years for tax fraud—that’s six years from the last affirmative act that was committed in relation to the fraud. If the IRS is going to charge you for civil tax fraud, they can go back an unlimited amount of time and assess civil penalties against you.

When evasion or fraud is involved, everything becomes more complicated. Talk to a tax attorney if you have questions or concerns about the statute of limitations in these complex cases.

What Is the Statute of Limitations for Tax Liens?

The IRS may file a federal tax lien if they’ve taken initial collection actions against you without success. The federal lien ensures the government keeps an interest in your property to collect the tax you owe. Property could be real estate, financial accounts, and other assets.

If you pay off your tax debt, the lien is released within 30 days. A federal tax lien has a statute of limitations of 10 years and 30 days from the date the IRS filed it.

Leveraging the Collection SOL to Reduce Your Tax Debt

Waiting out your tax debt isn’t really possible. Any time you have a job, your employer reports your wages to the IRS. However, there are programs where you can leverage the CSED to your advantage and use it to reduce or even eliminate your tax debt but only if you prove that you cannot afford to pay the tax debt.

With a partial payment installment agreement (PPIA), you to pay an agreed-upon monthly amount until the CSED, and then anything unpaid at that time no longer has to be collected. However, with this program, the IRS requires you to prove that your monthly payments are the most you can afford, and they review your situation every two years. If you earn more, you will have to pay more, and if you receive a windfall, you may be required to pay the full balance. 

Currently not collectible (CNC) status is for people who can’t pay anything. Once you prove that you can’t pay, the IRS stops all collection actions against you, but they check up on you periodically. If you keep this status until the CSED, the debt will expire, and you won’t have to pay.

Collection SOL on Filed vs. Unfiled Returns

The IRS can only collect tax liabilities that are 10 years or younger. However, that 10 years does not begin when you neglect, whether accidentally or willfully, to file your return. 

Instead, the clock for the 10-year time limit begins only when you file a tax return. So if you have not filed a return in years, the statute of limitations clock on those returns has likely not even started. 

It’s important to note that the IRS frequently files Substitute for Returns (SFRs) for taxpayers with unfiled returns. In other words, don’t assume that if you don’t file, the IRS won’t notice. If you haven’t filed, there’s always a chance that the IRS will file a return on your behalf at any point, and then assess the tax you owe. This can happen years after the return’s due date. 

Typically, with an SFR, the IRS doesn’t give you any credits or deductions. As a result, you incur a much higher tax liability than you would if you filed yourself. You will also end up owing back taxes and penalties for that tax year. 

The collection statute doesn’t start with the SFR. Instead, it starts when you agree with the SFR or when the IRS issues you a formal tax assessment based on the SFR. Generally, the IRS sends you a CP3219 or a similar 90-day letter that outlines your tax due based on the SFR and gives you 90 days to respond.

Does the IRS Have to Pay Me a Refund When I File Back Taxes?

There are times when taxpayers don’t file because the IRS owes them money, but they weren’t aware or didn’t want to bother with the return. However, that doesn’t mean that you have an unlimited amount of time to claim the refund. Unfortunately, the IRS will only allow you to collect tax refunds owed to you within the last three years. 

If you are owed a refund from more than three years ago, you forfeit the right to that money. That money becomes the property of the United States Treasury. 

For example, say you’re filing five years of back tax returns. You owe money for the most recent two years, and you’re due a refund for the three years before that. You won’t be able to get the refunds for the returns that were due prior to three years ago.

Always file your missing tax returns as soon as possible so you can claim any refund you’re owed. 

Additionally, if you’re self-employed and have missing tax returns, you risk not being credited as having paid into the system for those years. When you don’t report self-employment or business income, you don’t pay Social Security or Medicare tax on your income. 

As a result, you may not be able to take advantage of these programs as needed. Note that this is not an issue for employed people, as their employers should report their income and taxes paid to the IRS, so the government will have this information even if the taxpayer doesn’t file.

When the Statute of Limitations Gets Extended

We’ve talked about when the statute of limitations on tax assessment can get extended past the three-year mark, but what about collections? Can the IRS ever collect after more than 10 years? In some cases, yes. 

The statute of limitations on collections can be tolled (paused) in certain situations. This makes the collection time frame longer. 

For instance, say five years have passed. Then, the clock tolls for 12 months. When the clock resumes, the IRS still has five years to collect. In this scenario, the IRS has the right to collect your tax debt 11 years after the assessment, since those tolled 12 months didn’t count toward the 10 years.

Here are some situations that could extend the statue on collections:

• If you file an appeal on your back taxes or tax assessment.
• If you request an offer in compromise (OIC).
• If you request innocent spouse relief.
• If you sign a waiver to extend the deadline — for example, the IRS may ask you to sign a waiver so the agency has more time to perform a tax audit.
• If you file for bankruptcy.
• If you request an installment agreement.
• If you request a collection due process hearing.
• If you enter a combat zone.
• If you are in the military service.
• If you live outside the U.S. for a period of time.

The above circumstances don’t start a new 10-year time period. Instead, the time from when the clock was tolled gets added to the end of the original CSED. 

Say you file an OIC or request innocent spouse relief, which may take the IRS to process and approve. The statute of limitations is then pushed back for as long as the OIC is being reviewed — if it’s eight months, for example, then the statute gets pushed out eight months on top of the 10 years.

How Do You Find Your CSED?

In some cases, you may not be aware of what your CSED is on your tax debts. Fortunately, the IRS can provide that information.

You’ll need to take a look at what the agency calls your account transcript. You can access your transcript online by creating an account, calling the IRS at 800-908-9946, or submitting Form 4506-T, Request for Transcript of Tax Return. 

When you get your transcript, find the Transactions section and the three-digit transaction code and date. This is the CSED, which includes any time that’s been added by the IRS. Contact the IRS or a tax attorney if you believe the CSED provided by the IRS is incorrect. 

Get Help With IRS Tax Issues

The IRS is the most powerful collection agency on the planet, and as the time limits for collecting and assessing taxes get closer, the agency becomes more likely to take action. 

Don’t let this happen. Get help with unpaid taxes or unfiled returns as soon as you can. The W Tax Group has licensed attorneys and in-house accountants with many years of experience, who know exactly what to do when filing tax returns for prior years or in response to IRS letters threatening to file an SFR. 

If you haven’t paid your taxes in several years or have IRS statute of limitations questions, contact our team at The W Tax Group for help. We offer a 100% free tax case review so you can learn about your options without any financial commitment.

Lead Tax Attorney at The W Tax Group

Stephen A Weisberg