Once a withholding right is created, the IRS generally cannot release it until the tax, penalty, interest, and registration fees have been paid in full or until the IRS can no longer legally collect the tax. Paying your tax debt in full is the best way to get rid of a federal tax burden. As a general rule, there is a ten-year statute of limitations for IRS collections. This means that the IRS can try to collect your unpaid taxes for up to ten years from the date they were evaluated.
With some important exceptions, after the ten years have elapsed, the IRS must stop its collection efforts. Every year, the statute of limitations expires for thousands of taxpayers who owe money to the IRS. Owing money for back taxes can be a stressful situation that can last for years. While back taxes don't necessarily stay with you forever, the law does give the IRS at least 10 years to collect that debt.
Simply put, the statute of limitations for federal tax debt is 10 years from the date of the tax assessment. This means that the IRS must forgive the tax debt after 10 years. However, there are a few things to keep in mind. Generally speaking, the Internal Revenue Service has a maximum of ten years to collect unpaid taxes.
After that period has elapsed, the obligation is completely erased and removed from the taxpayer's account. This is considered “amortization”. The ten-year period is recognized as the limitation period in tax balances or the expiration date of the collection statute, commonly referred to as CSED. Taxpayers cannot easily identify this limitation because it is not in the best interest of the IRS to cancel a liability.
Your ten-year term begins when you file your tax returns and owe taxes. The IRS has three years from the date you file a tax return to assess any additional taxes that could result in an IRS liability. They don't make the ten-year limit comprehensible to taxpayers for fear that the taxpayer will simply wait for time to pass. If you're choosing to delay collection and “wait until the deadline,” you'll want to be prepared for the Internal Revenue Service's collection tactics to become severe.
When the time for your CSED approaches, the Internal Revenue Service will adopt more aggressive measures. Aggressive actions may include filing tax liens or issuing a tax lien on your bank accounts or your salaries. The quickest tactic to prevent collections from being made is to accept payment plans established by the Internal Revenue Service, also known as an installment agreement. Before you decide to take any matter into your hands with the Internal Revenue Service, you should consult tax professionals who are trained to negotiate with the IRS regarding tax liability and provide tax relief.
In general, the IRS has 10 years after the evaluation date to collect back taxes and tax-related fees, although there are some exceptions. This 10-year limit is known as the expiration date of the Collection Act (CSED) and frees tens of thousands of Americans from their tax obligations every year.