10-Year Statute of Collection Expiration

IRS Only Has 10-Years to Collect on Tax Liabilities

The IRS has 10 years to collect outstanding tax liabilities. This is measured from the day a tax liability has been finalized. A tax liability can be finalized in a number of ways. It could be a balance due on a tax return, an assessment from an audit, or a proposed assessment that has become final. From that day, the IRS has ten years to collect the full amount, plus any penalties and interest. If the IRS doesn't collect the full amount in the 10-year period, then the remaining balance on the account disappears forever. The statute of limitations on collecting the tax has expired.

Many taxpayers and some practitioners are unaware that the Internal Revenue Service (IRS) must collect a tax debt within 10 years. The 10-year period isn’t based upon the year for which the taxes are due but rather the date the liability was actually assessed. For example, if you have a return for 1996 that was not filed until 2001 and the tax wasn’t assessed until 2002, the 10-year statute would not begin running until 2002 and would not expire until 2012. However, if you filed your 1996 Return on time by April 15, 1997 and it was assessed soon thereafter, the 10-year statute of collection will expire in 2007. Once this specific date arrives, the IRS can no longer collect any outstanding balances.

Please be aware that individual states may be very different. California, for example, has NO statute of limitations on the collection of back taxes owed to the state.

How do you know when the tax was assessed?

In order to determine when the 10-Year Statute of Collections expires on any tax liabilities it needs to be confirmed when the tax return was filed and the liability assessed by the IRS.  Colonial Tax Consultants will collect this information for you during our free no obligation check up. Together we can learn if your tax liabilities are close to expiring which would result in a very quick, easy, and inexpensive resolution to your tax problem.

Will the IRS Notify Me Once the 10-Year Statute Expires?

It is not required that the IRS notify a taxpayer or a tax collection service that the tax liability is no longer collectible, even if the tax debt has been discharged as a result of the 10-year Stature expiring.  It is very important to note that  although tax liens can no longer be enforced, your tax lien may be still on file with credit bureaus or with your local recording office unless it is requested to be released.  Basically, the IRS makes it the taxpayers responsibility to ensure they reverse any adverse credit reports even once their tax debts are uncollectible because the 10-year period has expired.

To speak with someone about your specific situation and to find out with 100% certainty whether you have some tax liabilities that may be nearing their 10-Year Collection Expiration, please complete the online Consultation Request Form and we will contact you or call us directly at 866-573-3755.