Understanding the IRS Collection Statute of Limitations: Does Contacting Them Reset the Timer?

The IRS has a ten-year window to collect outstanding taxes owed to them. This period, known as the Collection Statute Expiration Date (CSED), starts from the date the tax is assessed. However, certain events, like audits, appeals, or bankruptcy, can put this process on hold. When and if you contact the IRS about your debt, does it reset the timer? Let's explore this common concern.

The Details of the Ten-Year Window

The statute of limitations for the IRS to collect taxes is ten years, and this is strictly calculated from the date of assessment. That means, if you owe taxes from 2020, the IRS can legally attempt to collect those taxes until 2030. However, certain factors like audits, appeals, and bankruptcy can temporarily pause this timeline, which is sometimes referred to as the CSED (Collection Statute Expiration Date).

What Happens When You Contact the IRS About Your Debt?

Many taxpayers wonder if contacting the IRS to discuss their outstanding debt can pause, extend, or reset the clock on the CSED. According to the IRS, a mere discussion about the debt does not affect the statute of limitations itself. If you contact the IRS to negotiate a payment plan, discuss an audit appeal, or even request an installment agreement, these activities do not reset the timer.

Exceptions: The Role of Certain Events

There are specific events that can indeed impact the CSED:

Bankruptcy: As a legal defense, bankruptcy can completely stop the IRS's collection efforts. If you file for bankruptcy, the timeline is paused, and the IRS cannot collect the debt during this period. Once the bankruptcy process is completed, the CSED continues, but collections may be temporarily delayed. Audit Appeal: If you are facing a tax audit and you choose to appeal the findings, the CSED can be paused until the appeal is resolved. Similarly, if you have requested a collection_due_process hearing, the timeline is likewise suspended until the matter is fully addressed.

Conclusion: Staying Informed and Acting Strategically

If you're dealing with outstanding tax debts, it's important to stay informed about the statute of limitations and the potential impact of contacting the IRS. Understanding these rules can help you make more informed decisions and potentially negotiate better terms.

Remember, while contacting the IRS may not reset the clock, seek professional advice if you are facing tax issues. Tax professionals can help you navigate the complexities of the CSED and find the best way to address your debts, whether it's through payment plans, appeals, or other strategies.

Stay proactive and informed! If you have more questions about the IRS statute of limitations or how to handle tax debts, consider consulting a tax professional or visiting the official IRS website for more detailed guidance.