The federal tax lien statute of limitations is the amount of time the IRS has to collect tax debt before it expires. After this date, the agency can no longer attempt to collect past-due taxes from you. In most cases, the statute of limitations is 10 years. However, certain collection actions may require the taxpayer to waive the statute of limitations.
The statute of limitations clock begins ticking on the date the IRS assesses the debt in question. This is typically one of the following:
Using this date, the IRS calculates your Collection Statute Expiration Date (CSED), which is the date your debt expires. When you receive a federal tax lien, which means the IRS has a claim on your property, the accompanying paperwork will list your CSED. This document is a public record and can be obtained through your local county clerk’s office. It also has a negative impact on your credit score, which makes it difficult or even impossible to qualify for mortgages and loans.
If you owe taxes but haven’t heard from the IRS in several years regarding collections, you can request a copy of your federal tax lien from your county clerk’s office to learn your CSED. Avoid contacting the IRS in this situation to ask about the statute of limitations, as this can sometimes trigger resumption of collection activities.
When the taxpayer takes certain actions, the collection timeline is effectively paused and thus the time for the IRS to collect is extended. This occurs when:
When your CSED arrives, you are no longer responsible for the tax debt in question, and the IRS can no longer attempt to collect the debt. Any federal tax liens that have been placed on your home, bank accounts, wages, or other assets will expire, which means the IRS no longer has a claim to your property.
The IRS has 30 days after the CSED to release a federal tax lien. If they haven’t done so once 30 days has passed, you can contact the Lien Department at 800-913-6050 to request release of the lien. You should also request copies of the release so you can send it to the three major credit bureaus. This will remove the active lien from your credit reports, which may improve your credit score.
The IRS will credit your account for the past-due amount with a notation that the collection date has expired. You can request a copy of this account statement for your records.
Although the statute of limitations means you can eventually outrun your tax debt, most taxpayers with a past-due balance are subject to repeated attempts by the IRS to collect. The steps in the IRS collection process typically include:
Keep in mind that you have the right to appeal at any point during the collection process. However, doing so will usually extend the CSED for your tax debt. If you cannot afford to pay the taxes you owe, you can still avoid a federal tax lien and further collection actions by arranging a payment plan with the IRS, applying for an offer in compromise in which the debt is settled for less than you owe, or establishing currently not collectible status if paying the debt would create undue hardship.
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