Generally speaking, the IRS has a legal limit to how long they can chase you for collection of back taxes. This limitation is 10 years from the date the tax was assessed. The assessment date is usually a couple months after you file the return, because it usually takes that long for somebody at the IRS to process it and enter the assessment into their computer system.
It is not uncommon for the resolution strategy for some older back taxes to be simply riding out the statute of limitations. The date on which the statute of limitations on collections runs out is called the CSED, short for Collection Statute Expiration Date. You can find this date by calling the IRS, but you can also calculate it yourself pretty easily. It's ten years from the date your assessment posted, which you can guestimate as being around the date you first ever received a bill from the IRS about it. This also corresponds roughly to between 30 and 90 days after the date you filed the tax return.
Now that you have a rough idea of when your 10 years started, you need to look at things that may have "stopped the clock" on your CSED, thereby extending the last day of the CSED. Certain actions you take while attempting to resolve your tax situation will all stop the clock.
For example, if you file an Offer in Compromise or a Collection Due Process Appeal, the clock is NOT running between the dates your Offer or Appeal is filed and the date that it is closed out by the Offer Division or Appeals Division. This is an important thing to consider, as the Offer and Appeals processes both take up to 6 months, sometimes even longer. Having the clock stopped on your ten year limit can end up hurting you in the long run. This is one of the biggest reasons why you shouldn't file an Offer in Compromise unless you know you have a high chance of successfully being granted the Offer in Compromise.
What happens to the tax, penalties, and interest after the date of the CSED comes and goes? The tax Credit7 literally just goes away.
Considering the fact that the IRS is the single largest collection agency in the entire United States, and the one with the most authority to mess with your life, it is a good idea to know the date on which your issues will end, as it can have an impact on your life planning.
Generally speaking, the IRS has a legal limit to how long they can chase you for collection of back taxes. This limitation is 10 years from the date the tax was assessed. The assessment date is usually a couple months after you file the return, because it usually takes that long for somebody at the IRS to process it and enter the assessment into their computer system.
It is not uncommon for the resolution strategy for some older back taxes to be simply riding out the statute of limitations. The date on which the statute of limitations on collections runs out is called the CSED, short for Collection Statute Expiration Date. You can find this date by calling the IRS, but you can also calculate it yourself pretty easily. It's ten years from the date your assessment posted, which you can guestimate as being around the date you first ever received a bill from the IRS about it. This also corresponds roughly to between 30 and 90 days after the date you filed the tax return.
Now that you have a rough idea of when your 10 years started, you need to look at things that may have "stopped the clock" on your CSED, thereby extending the last day of the CSED. Certain actions you take while attempting to resolve your tax situation will all stop the clock.
For example, if you file an Offer in Compromise or a Collection Due Process Appeal, the clock is NOT running between the dates your Offer or Appeal is filed and the date that it is closed out by the Offer Division or Appeals Division. This is an important thing to consider, as the Offer and Appeals processes both take up to 6 months, sometimes even longer. Having the clock stopped on your ten year limit can end up hurting you in the long run. This is one of the biggest reasons why you shouldn't file an Offer in Compromise unless you know you have a high chance of successfully being granted the Offer in Compromise.
What happens to the tax, penalties, and interest after the date of the CSED comes and goes? The tax Credit7 literally just goes away.
Considering the fact that the IRS is the single largest collection agency in the entire United States, and the one with the most authority to mess with your life, it is a good idea to know the date on which your issues will end, as it can have an impact on your life planning.
No comments:
Post a Comment