Posted: Sarah Nieschalk | December 8, 2015


When Does Your Tax Debt Expire?

Given the extent of the IRS' reach when a balance is due, you might assume that their collection efforts can go on indefinitely. And paying back a tax debt under strained financial circumstances can seem hopelessly interminable. But the good news is that the IRS only has so much time to collect from you.

It's safe to assume that if it were possible, you would at least consider waiting out the IRS. While knowing just how long they have to hold you liable for that balance is valuable information, you must exercise caution in testing their patience. Your best move may be to have a clear understanding of some tax collection facts and how they apply to your unique situation.

Your Expiration Date

When the IRS assesses a tax debt, they will send you a notice informing you of how much is owed, for what year(s) and when you need to pay (typically, this is immediately). What they won't necessarily advertise is that they have only ten years from the date of assessment to collect the full balance. If your tax debt was assessed on August 1st, 2014, it will expire on August 1st, 2024. In certain instances, this collection time can be frozen. As an example, if you attempt an Offer in Compromise, your collection time will be halted pending the outcome of your request.

This end date, known as the Collection Statute Expiration Date, represents the last day that the IRS can demand payment for your liability. In addition to collection efforts being halted, your balance is dissolved. Although this termination date can ultimately work to your advantage, reaching it can be more trying than you realize.

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A Decade is a Long Time

You might assume that you can simply avoid the IRS until the clock runs out on your debt. Were it only that simple. It's possible that in certain extreme circumstances you could sidestep IRS collections, but you can't underestimate their resources or tenacity.

First, even if the IRS doesn't have a current address on file, there are plenty of other ways for them to track you down. Your employer, for instance, is legally required to report your employment and withhold taxes from your paychecks. If you disregard IRS correspondence, they can simply garnish your wages.

It's also important to understand that the longer your debt goes unpaid and grows with the addition of penalties and interest, the more aggressive collection efforts will become. Uncle Sam is well aware of how much time is on the clock. As your debt approaches its expiration, the harder it will be for you to avoid invasive action.

Resolution Rather than Expiration

It's highly unlikely that your tax debt will reach the ten-year mark without you enduring a bank levy, tax lien or property seizure. You may find that the attempt simply isn't worth the stress. If this is the case, you can explore your resolution options. The IRS has a number of programs for taxpayers of various financial means; the right one will allow you to avoid constant and unwanted attention. You may want to talk to a licensed tax professional to learn more. Ultimately, this will be far easier than playing hide and seek with the IRS for ten years.


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Written by Sarah Nieschalk

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