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In previous Blog posts I discussed installment plans and “offer in compromise”. In this post we will cover a little know IRS rule called “The Collection Statute Expiration Date” (CSED) – also known as the “collection statute of limitations”
Basically it means that the IRS can no longer collect and has to remove existing levy’s against property for outstanding tax debt older than 10 years from the assessment date which would be typically on or shortly thereafter April 15, the due date of the actual year in question assuming you filed that return in a timely fashion without an extension. So if you owed back taxes for the year 1999 and filed by April 2000, the expiration date would be April 15 2010.
However, there is a provision called “tolls” which can extend the 10 years such as Bankruptcy, Offer in Compromise and several other situations.
In the case of Bankruptcy, the CSED will be extended for the duration of the bankruptcy proceedings on non-dischargeable tax liabilities, plus 6 months. Duration of the bankruptcy proceedings extends from the date you filed for bankruptcy to the date the bankruptcy is discharged or dismissed.
Dan
