Oh, no! More alphabet soup from the IRS. How can you understand your CSED if you don’t know what it stands for?
By reading the rest of this blog post, of course! We wouldn't leave ya hanging. Learn all you need to know about your CSED, including how the agency assesses it and the difference between a suspension and an extension. We also tell you how to find your CSED and what to do if you disagree with what you find.
CSED stands for Collection Statute Expiration Date. It marks the end of the IRS’s tax collection period, which is typically 10 years from the assessment date. Once the CSED expires, any remaining outstanding tax debt is forgiven.
Several assessments have a CSED:
- Your original tax assessment from your voluntarily filed return
- Any tax assessments arising from an amended return
- Any SFR (Substitute For Return) filed by the IRS if you failed to file one yourself
- Audit assessments
- Some penalty assessments
However simple it may seem to just wait out your 10-year limit, it’s best if you don’t try. Here’s why.
The CSED Can Be Suspended or Extended
Several events can cause your original 10-year CSED to be suspended, meaning the clock stops. The 10-year deadline doesn't shift; it just stalls for a while. Other events can cause your CSED to be extended - your deadline gets moved further than 10 years down the road.
During a suspended CSED, the IRS generally doesn’t take levy action, although there are exceptions. An extended CSED allows the IRS to legally authorize a specific amount of time to be added to your initial 10-year timeline. Still, they are not prohibited from trying to collect your tax debt.
Here’s where it gets tricky. More than one action can suspend a CSED, and the overlapping circumstances run simultaneously. You can’t stack event on event and suspend the CSED indefinitely. The time for multiple events is not added more than once, either, where one event overlaps another.
What Can Suspend a CSED?
You can suspend your CSED by:
- Requesting an installment agreement
- Filing for bankruptcy
- Submitting an offer in compromise
- Requesting a Collection Due Process hearing
- Filing an Innocent Spouse claim
Once you request an installment agreement, the IRS suspends the CSED while the request is pending. Once the agreement is reviewed and established, or alternatively rejected, the CSED continues with a couple of caveats.
If the agreement is rejected, the CSED remains suspended for 30 days. If you default on payments for your installment agreement and the IRS proposes termination (of the agreement, not you), the CSED is suspended for 30 days.
If you exercise your right to an appeal of an installment agreement rejection or termination, the CSED is suspended for the time the appeal is pending until the date the appealed decision becomes final.
Filing for bankruptcy suspends the CSED while the filing is pending. The suspension runs from the time you file the petition until the date the court discharges, dismisses, or closes the bankruptcy. Bankruptcy also earns you an extension of an additional six months upon concluding the bankruptcy case.
If you submit an offer in compromise, the IRS suspends the CSED while the offer is pending. Once it's accepted, returned, withdrawn, or rejected, the suspension ends. If it's rejected, your CSED remains suspended for another 30 days. You can also earn a suspension while your appeal of rejection is pending.
Requesting a Collection Due Process hearing suspends your CSED from the date the IRS receives your request until you withdraw your request or the determination becomes final, including any court appeals.
If less than 90 days remain in the CSED when the determination becomes final, the period is extended to 90 days from the date of the final determination. In other words, the suspension becomes an extension.
Only the spouse filing an innocent spouse claim can receive a suspension of their CSED, not the other (allegedly) not-innocent spouse. An innocent spouse claim suspends the CSED according to one of the following:
- From the date of filing to the earlier date, a waiver is filed
- The expiration of the 90-day period for petitioning the court
- If the tax court is petitioned, the date the tax court decision becomes final
Any time you petition the tax court, the collection period is extended an additional 60 days.
What Extend a CSED?
Your CSED can be extended if you leave the country and live abroad for more than six months or if you have a military deferment. In either case, you lengthen your CSED.
Some tax debt never expires. The IRS can come to collect for the rest of your life, such as for a tax assessment resulting from a conviction of tax fraud. If the IRS sues you, the CSED is then suspended.
When the Collection Period Ends
If you manage to get to the end of your CSED, the IRS may no longer initiate administrative or judicial collection of the remaining assessed tax debt. However, if the IRS levied your fixed and determinable right to future income before the collection period expires, you’re stuck with the levy.
The IRS can continue to legally attach to and receive payments from a levy beyond a CSED expiration.
Where to Find Your CSED
Presumably, you are aware the IRS is after you for your tax debt, so you need to know when it might stop. The IRS central database maintains a current calculation of your CSED based on the combined information input on a particular account and for the specified tax periods applied.
The database reflects any account additions or changes as a numerically coded start and stop date. You can get an Account Transcript through IRS.gov, the online IRS portal. If you prefer, you can submit Form 4506-T, Request for Transcript of Tax Return. The earliest CSED appears on the account transcript.
Also, you can call 1-800-829-1040 and ask the IRS to explain how it calculated a specific CSED if you question its accuracy on the transcript.
So…if you disagree with the transcript, contact the IRS, request a review account and verify, and provide an explanation of the accuracy of the CSED calculation under consideration. The IRS says it will "provide to America's taxpayers top quality service by helping them to understand and meet their responsibilities and by applying the tax law with integrity and fairness to all."
What if you made payments after the CSED? Contact the IRS for a refund but do it before the Refund Statute Expiration Date (RSED).
We are sure you now feel enlightened as to the CSED. Thanks for coming to our TTD talk! Contact Top Tax Defenders if you have more questions.