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The IRS Statute of Limitations on Tax Debt: What Expires and When

By:
Marc Guberti
3 min read
- Getty Images
Getty Images

The IRS typically has 10 years from when your tax is assessed to collect taxes, penalties and interest. That deadline is called the Collection Statute Expiration Date (CSED) and at that point, the IRS can no longer garnish your wages or try to collect in other ways.

But if you file your taxes and owe money, it’s best to pay it straight away, since that balance will accrue interest and penalties over time. Here’s what to know about the 10-year statute of limitations.

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How the 10-year clock works

Keep in mind that the clock starts when your taxes are assessed — not when you file. Once the 10 years is up, the IRS generally can’t continue to collect your taxes.

But there are events that can temporarily suspend the clock, including if you file for bankruptcy, submit an offer in a compromise application or request an installment plan. Requesting a Collection Due Process hearing or living outside of the U.S. for at least six months can also pause the clock. The IRS breaks down all events that can temporarily suspend the clock on its website.

If you’re tempted to wait out the IRS, think again. The agency may get more aggressive with its collection efforts when the CSED is near, according to experts at Wiggam Law. Plus, you’re facing penalties and interest.

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What to know about interest and penalties

The IRS won’t pull a fast one on you when you owe debt. The government will send you a CP14 after you file your taxes to let you know that you owe Uncle Sam. This notice informs you about how much you still owe, and gives you a 21-day deadline to pay.

Overdue taxes come with interest and penalties. The rate of that interest is the federal short-term rate plus 3%. The IRS determines it quarterly, and it compounds daily. You’ll also face a monthly late payment penalty if you don’t pay what you owe, which is 0.5% what you owe per month or part of the month up to 25%. That jumps to 1% 10 days after the IRS has issued a notice of intent to levy your property because of the unpaid taxes (though it will decrease to 0.25% if you get an installment agreement with the IRS).

The IRS can eventually seize your property if you don’t pay, including garnishing your wages.

How to find your CSED

Your CSED can be found in your account transcript, which you can get online or via mail with Form 4506-T. You can also call the IRS at 800-908-9946. You will then find a date that indicates when your 10-year window concludes.

The IRS has step-by-step instructions on its website.

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