Key Takeaways
The IRS generally has 10 years to collect back taxes, starting from the date they were first assessed.
Certain actions can pause or extend the collection period, such as filing for bankruptcy, requesting a payment plan, or submitting an Offer in Compromise.
You have options if you can’t pay, including installment agreements, hardship status, or settling for less through an Offer in Compromise.
The IRS Collection Process and Timeline
When you fail to pay your taxes on time, the IRS doesn’t immediately seize your assets. The collection process begins with a series of notices. First, you’ll receive a Notice and Demand for Payment, which officially informs you of the balance due. If you ignore this notice, the IRS follows up with additional letters, each one becoming more urgent than the last.
If you still don’t respond or make arrangements to pay, the IRS will likely issue a Notice of Federal Tax Lien, securing its claim against your property. Continued inaction generally results in the IRS sending a Final Notice of Intent to Levy and Notice of Your Right to a Hearing. This is a critical step; it gives you 30 days to respond before the IRS can legally begin seizing your wages, bank accounts, or other assets to satisfy the debt.
If the IRS is unable to collect through these actions or direct contact, it may transfer your account to a private debt collection agency. The IRS currently works with three authorized collection firms, and while these agencies can contact you about payment, they cannot take enforcement actions like levying your assets; only the IRS can do that. However, you’re still responsible for resolving the balance, and communication with these agencies should be handled carefully to avoid scams or confusion.
The Collection Statute Expiration Date (CSED)
The IRS cannot hound you indefinitely about your tax debt. It has a limited time to collect back taxes. This period, known as the Collection Statute Expiration Date (CSED), is generally 10 years from the date the tax was assessed. Once that 10-year period expires, the IRS can no longer legally collect the debt. However, the clock doesn’t always run continuously — certain actions can pause or extend it.
Exceptions to The IRS Statute of Limitations
Although the 10-year rule provides hope for many taxpayers, several circumstances can extend (or “toll”) the statute of limitations. For example:
- Submitting an Offer in Compromise (OIC): The collection period is paused while the IRS reviews your offer.
- Filing for Bankruptcy: The time during which your bankruptcy case is active — plus an additional six months — is excluded from the 10-year period.
- Requesting an Installment Agreement: While your request is under review, the CSED is temporarily suspended.
- Leaving the Country: If you’re outside the U.S. for more than six months, the clock stops ticking.
More importantly, in cases involving tax fraud or evasion, the statute of limitations does not apply. This means the IRS can pursue collection indefinitely.
Owe The IRS & Can’t Pay? You Have Options
If you owe the IRS and can’t afford to pay in full, don’t panic. There are legitimate options available to help you manage or even reduce your debt.
- Installment Agreements: Make affordable monthly payments toward your balance over time.
- Currently Not Collectible (CNC) Status: If you’re experiencing financial hardship, the IRS may temporarily pause collection efforts.
- Offer in Compromise (OIC): Settle your tax debt for less than you owe, if you qualify.
Each option has its own requirements and benefits, and choosing the right one depends on your financial situation.
Get Help Today
Dealing with the IRS can be intimidating, but you don’t have to face it alone. Tax Defense Network has helped thousands of taxpayers find real relief from IRS collection actions.
Contact us today at 855-476-6920 for a free consultation to explore your tax relief options and take the first step toward financial peace of mind.