Do you know what CSED stands for? Collection Statute Expiration Date. And CSED means the time period by which the IRS must collect the taxes you owe. Beyond this time limit, your tax debt is cancelled. But before you jump for joy, you need to know that the CSED time limit is 10 years. And furthermore, it can be extended. Your CSED period can be extended due to several factors listed below. If you are not sure if your CSED expired, you should consult a tax attorney who can help you sieve through your personal records of tax payments and other tax related matters. Here are several situations where your CSED may be extended. Click here to read or watch more IRS Help resources.
Essentially your CSED may be extended if you have made any applications for a reduction or cancellation of your tax debt. For instance, if you have tried to declare bankruptcy, your CSED is extended by the time the bankruptcy proceedings go on. If you have applied for any number of Offers in Compromise, that time cannot be figured into your ten years, either. An Offer in Compromise typically takes 1 year to be completed so your CSED is also extended by that length of time. So quit trying to play cat and mouse with the IRS; they will begin to come at you with tougher and tougher sanctions as your CSED date draws closer. With bulldog tenacity, they will stop at nothing to collect the money that is theirs long before the deadline hits.
But this does not mean an Offer in Compromise is futile. In fact, it has saved thousands of Americans millions of dollars in the past and it can save you, as well. But first, you need to show that your tax debt is beyond your capacity to repay. If you succeed in doing so, then your CSED becomes immaterial. If your Offer in Compromise comes through, the IRS will likely cut a deal with you so you can get away with paying significantly less. Secondly, if you can show that there was an error in the computation of your tax bill, you can have it reduced or even cancelled altogether. One final option is to offer a lump sum payment that is less than what you owe. If the lump sum is not less than 80% of the total tax bill, it is not uncommon for the IRS to accept your proposal and waive the rest of your debt.
So you should consult a tax attorney who can advise you on which course of action is the most suitable for you. If you succeed in reducing or eliminating your tax debt, you won’t need to worry if your CSED expired or not.