Some of you may be familiar with Collection Statute Expiration Date or “CSED” for short. This is the date in which your tax liability expires and the Internal Revenue Service writes off whatever is left of that period of liability. However, these dates are not always as cut and dry as the Service may lead one to believe.
Generally speaking, the Collection Statute Expiration Date expires 10 years from the date in which the tax liability was assessed for that period (not the date the return was filed). However, this not a hard and fast rule and can cause taxpayers a lot of headaches when trying to figure out when their liability should be written off by the Service.
You can contact the Internal Revenue Service today to ask what the Collection Statute Expiration Dates are for all periods with balances due. Sometimes the dates may be spot on and sometimes they’re incorrect. It is important to know that occasionally the Internal Revenue Service’s computer system doesn’t automatically update the Collection Statute Expiration Dates to include the various codes that can toll the statute.
For instance, let’s say you filed for bankruptcy- for as long as your liability is coded as being in bankruptcy, that amount of time gets added onto the back end of your Collection Statute Expiration Date. Same thing is true with a Request for a Collection Due Process or Equivalent Hearing, filing for an Offer in Compromise, or filing a Request for Taxpayer Advocate Service Assistance- all of these actions toll the collections statute and add time onto the end of the statute. Even having a “Pending Installment Agreement” code on your account adds time onto the back end of your Collection Statute Expiration Date.
Next time you hear the Internal Revenue Service give you a date in which your liability is set to expire, take a look at your account transcripts and do a little bit of research on your end to confirm if the dates are accurate or not.