Darrin Mish: Today, I'm going to try not to slouch and make it so that all you see is me slouching down like this. It seems like I sink the longer I talk, I tend to sit back and relax and make it so that you can't really see me that well. So, anyway, today we're going to talk about what's known as the Collection Statute Expiration Date. I'll sometimes call it the CSED and the IRS will sometimes call it the CoSED I'm not really sure, that's not really an accurate acronym, but that's what they call it. Basically what it is, it stands for the proposition that a tax liability only has a ten year lifespan. The IRS only has ten years from the date of the assessment of a tax to collect it.

This holds true for income tax and payroll tax, and so it can actually be a very helpful tool in the resolution of IRS problems. I just said it was ten years from the date of the assessment. Now, what does that really mean in English?

Here's what it means. When the IRS goes ahead and puts a liability on the books and it becomes formally due and payable by you, the taxpayer, that's essentially an assessment. Assessments can happen up to three years, in normal cases, after the filing of a tax return. So, you never know when an assessment was actually posted.

Typically, the filing of your return is what triggers an assessment, if you owe tax, and the ten year time clock will start to run. Now when can that assessment actually be later than when you file a tax return? Well, when you get the little love letter that says, "Hey, you made a mistake on your return and you actually owe us more money." So, you can actually have an assessment after the initial assessment.

There's also the instance where if you fail to file a return the IRS can prepare what's known as a substitute for return for you, which I referenced in an earlier blog post, and then you can have the statute of limitations beginning to run from the date of that assessment.

Now, there are several things that can actually toll or stop the running of that ten years, and some of them can add time onto that ten years. So, it's not so simple as just counting, "Well, when did I file the return?" or "When was the assessment? So count ten years forward; no, I'm off the hook."

Some of the things that can actually stop the collections statute from running are bankruptcy, which actually tolls the statute for the time that the bankruptcy was pending plus one year; an offer and compromise, which currently under current law tolls the statute for the time the offer was pending plus sixty days that law has actually changed three times in the last five or six years. So, that can be very tricky. It's very date specific. One of the other things that can toll the collections statute is an innocent spouse request. It will toll the collections statute while the innocent spouse petition is pending. Any kind of... not any kind, but certain types of IRS appeals can actually toll the collections statute from running, as well as the filing of a 911 with a taxpayer advocate.

So you see, it's not really so simple as just counting up days and saying, "Well, my ten years are up, so now I'm off the hook." There are a lot of things that can actually extend that time and keep it running.

There are also things that you don't want to do if the collection statutes are very short. So, go ahead and have a professional like myself take a look at your case and make sure that you don't make a mistake that ruins your case.

That's all for now. Thanks for watching.