Your IRS debt doesn't last forever - CSED

What's that? Well, in the context of an IRS problem case there is something known as the Collection Statute of Limitations. You will hear me sometimes call it the CSED, which is an acronym that stands for the Collection Statute Expiration Date or sometimes you're hear the IRS talk about it as the COSED, which is Collection Statute of Expiration Date, same thing.

The thing that's interesting to know or that you need to know is that there is a 10-year statute of limitations for the collection of tax, of the income tax and payable tax as a matter of fact. That begins to run ten years from the date of the assessment of the tax. Now I could actually talk about this for an hour or two in a real technical setting, but I am not going to do that because we don't have a lot of time on this video.

But what you need to think about is the assessment date is when the tax became formerly due and owing to the IRS. That's normally April 15th, which is the due date of the return for most people, but it's not always. If you file your return early, it becomes April 15th, the due date of the return, but if you file your return late, it becomes the later of those two dates. So if you file your return, you get an extension and you get an October extension, so you don't have to file on April 15th. But if you go ahead and you file on September 9th, then all things remaining constant lets you to assume that they accept your return and they assess the tax on September 9th; that will be the assessment date that the ten years will start to run from.

Now there can be multiple assessment dates and let me give you an example. If you file a return and it shows that you are a $100 and then later on the IRS finds a math error or they decide to audit you, and two years later they decide to assess additional tax. Then you would have a second assessment date and the ten years statute of limitations would begin to run from that date as well for ten years.

Now there are a number of things called tolling factors that can apply which will actually stop the collection statutes from running. Let me give you some examples just off the top of my head, this is by no means meant to be an exhaustive list, but an offer in compromise is one thing that can toll your statute or extend it. A bankruptcy is another, the filing of an innocent spouse application or a collection due process hearing. There is a laundry list of different things or different actions that could have been taken --


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