- 25.6.9.1 Collection Statute Expiration Date (CSED) Overview
- 25.6.9.2 What Is the CSED
- 25.6.9.3 CSED Research
- 25.6.9.4 CSED Procedures
- Exhibit 25.6.9-1 Computation Of FTD & Interest
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This chapter provides guidance in determining the CSED and extension of the CSED.
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The CSED is the expiration of the time period established by law to collect taxes. The CSED is normally ten years from the date of the Summary Record of Assessment (Form 23C, RACS 006) of:
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Transaction Code (TC) 150, Tax Assessed
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TC 160, Manually Computed Delinquency Penalty
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TC 166, Delinquency Penalty
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TC 170, Estimated Tax Penalty
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TC 176, Estimated Tax Penalty
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TC 180, Deposit Penalty
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TC 186, FTD Penalty
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TC 234, Daily Delinquency Penalty (if it is the only CSED in the module)
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TC 238, Daily Delinquency Penalty
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TC 240, Miscellaneous Penalty (all except for Reference Codes 697 and 699)
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TC 246, 8752 or 1065 Penalty
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TC 290, Additional Tax Assessment
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TC 294, Additional Tax Assessment with Interest Computation Date
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TC 298, Additional Tax Assessment with Interest Computation Date
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TC 300, Additional Tax or Deficiency Assessment by Examination or Collection
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TC 304, Additional Tax or Deficiency Assessment by Examination or Collection
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TC 308, Additional Tax or Deficiency Assessment by Examination with Interest Computation Date
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TC 320, Fraud Penalty
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TC 350, Negligence Penalty
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TC 340 Restricted Interest (Doc Code 47 and 51 only)
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If the CSED expired prior to 11/5/1990, the CSED was 6 years. If the CSED had not expired as of 11/5/1990, it was extended to 10 years.
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Each additional assessment of tax carries it's own CSED of 10 years.
Example:
If the taxpayer filed a timely original return that contained a TC 150 assessment for the 2003 tax year, the CSED would be April 15, 2014. If the taxpayer files an amended tax return on June 26, 2006 to increase tax, the CSED for that additional assessment would be June 26, 2016.
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The reversal of any refundable credit (i.e., Earned Income Credit) carries the CSED of the TC 29X or TC 30X adjustment.
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The Service and the taxpayer may agree to extend the collection period in only two situations:
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Where the extension is agreed to at the same time as an installment agreement is entered into between the taxpayer and the Service, or
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Where the extension is agreed to prior to a release of levy under I.R.C. § 6343 which occurs after the expiration of the ten-year collection period.
Note:
Prior to the IRS Restructuring and Reform Act of 1998 (RRA of 1998), the Service and the taxpayer had been allowed to agree to extend the collection period in any situation; under the RRA of 1998 such extensions generally expired by December 31, 2002.
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To determine the CSED and extension of the CSED, you may need to refer to the following Internal Revenue Manual Sections and/or Internal Revenue Codes Sections including:
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IRM 5.1.19, Collection Statute Expiration
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IRM 5.8, Offer In Compromise Handbook
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IRM 5.14, Collection Installment Agreement Handbook
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IRM 5.19.1, Liability Collection
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IRM 25.6, Statute Of Limitations
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IRM 25.6.17, Legal Holidays
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IRC Section 6502, Statute For Collection
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IRC Section 6503, Suspension Of Collection
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The following subsections provide procedures for handling the CSED and extension of the CSED.
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The period for collection may be postponed or the running of the collection period may be suspended by the events listed below. A TC 550 is input to extend the CSED in accordance with the event causing postponement or suspension.
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Military Postponement. This event is indicated by a TC 500. IRC § 7508 postpones the time for collection, by the Secretary, by levy or otherwise, of the amount of any liability in respect of any tax assessed against an individual serving in a combat zone or certain other areas of military service. See IRM 25.6.16, Combat Zones and Other Areas of Military Service, for a description of combat zones and other areas of military service.
Note:
A taxpayer may have requested and obtained relief from collection under the Soldiers and Sailors Relief Act (the"SSRA" ), 50 USC Appendix 573. This event is indicated by a TC 500. The SSRA applies to a person in the military. The SSRA defers collection of current or back income taxes (for up to six months after termination of military service) if such person's ability to pay is materially impaired by reason of military service. Rev. Proc. 57-25, 1957-2 C.B. 1092, prescribes the policy and procedure for the deferment of the collection under the SSRA. See also, Pub. 3, Armed Forces’ Tax Guide. The period of limitations for collection of the deferred taxes is suspended for the period of military service plus nine months. This event is indicated by a TC 500.
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Disaster Areas or Terroristic Action Postponement. This event is indicated by a TC 971. IRC § 7508A postpones the time for collection, by the Secretary, by levy or otherwise, of the amount of any liability in respect of any tax assessed against certain persons affected by a Presidentially declared disaster or a terroristic or military action. See IRM 25.6.6.8.2, Presidentially Declared Disaster Area, or IRM 25.6.6.8.4, Presidentially Declared Terroristic or Military Action, for a description of areas or actions.
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Taxpayer Assistance Order. This event is indicated by a TC 971. If the taxpayer applies to the Taxpayer Advocate for a taxpayer assistance order, the statute is suspended while the application is pending and for any period thereafter as stated in the order. See I.R.C. § 7811(d).
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Collection Due Process Cases and Tax Court Litigation. This event is indicated by a TC 520. The period for collection is extended for the period that the Service is barred from collecting because the matter is before the Tax Court. See IRC § 6503(a)(1).
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District Court Litigation. This event is indicated by a TC 520. The period is effectively extended by the Service timely filing a suit in United States District Court to reduce a Tax Court deficiency judgment to personal judgment. The period on collection by levy likewise is extended by the government's obtaining a judgment against the taxpayer. See I.R.C. § 6502(a). While all or substantially all of the taxpayer's assets are in the control or custody of a court, and for six months thereafter, the collection statute similarly is extended. See IRC § 6503(b).
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Bankruptcy. This event is indicated by a TC 520. While the IRS is prohibited from collection by reason of the taxpayer's bankruptcy case, i.e, while the automatic stay is in effect, the collection period is suspended for the period of time the automatic stay is in effect, plus six months. See IRC § 6503(h)(2). The Revenue Officer should seek advice of local Area Counsel if such issues arise. (Of course, a taxpayer in bankruptcy may have his tax liabilities discharged, which would make the statute of limitations issue irrelevant.)
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Summons Enforcement. This event is indicated by a TC 520. For most summonses, if a taxpayer files suit to quash the summons, then the statute of limitations on collection will be suspended until the proceeding is finally resolved. See I.R.C. § 7609(e)(1).
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Third-party summons. If the summons has not been resolved within six months and the cause of the lack of resolution is other than the taxpayer filing a suit to quash the summons, then the statute of limitations will be suspended beginning on the date which is six months after the service of the summons and ending on the date of the final resolution of such response (the typical case here is when a third party—not the taxpayer--either ignores the summons or files a suit to quash). See I.R.C. § 7609(e)(2). Assistance should be sought from local Area Counsel in cases involving extensions of the CSED due to summons enforcement.
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Offer-In-Compromise. This event is indicated by a TC 480. The collection statute is automatically suspended (1) for the time an offer-in-compromise is pending, and (2) for 30 days after the rejection of an offer plus any time during which a timely appeal is pending. See IRC § 6331(k)(3)(B) referencing IRC § 6331(i)(5).
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Installment Payment Agreement. This event is indicated by a TC 971. The collection statute is automatically suspended (1) for the time an offer for an installment agreement is pending, (2) for 30 days after the rejection of an offer plus any time during which a timely appeal is pending, and (3) for 30 days after the termination of an installment agreement plus any time during which a timely appeal is pending. See IRC § 6331(k)(3)(B) referencing IRC § 6331(i)(5).
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Innocent Spouse. This event is indicated by TC 971 Action Code 065. The statute of limitations on collection of assessments for taxpayers who requested relief under sections 6015(b), (c) or (f ) is suspended during the pendency of the taxpayer's claim for the time that the Service is prohibited from engaging in certain collection activity plus 60 days. See IRC section 6015(e)(2). Section 6015(b) or (c): The Service is prohibited from engaging in certain collection activity with respect to the year for which a claim is made for relief under section 6015(b) or (c) from the date the claim is filed until: (1) a waiver (Form 870-IS) is filed; (2) the expiration of the 90-day period for petitioning the Tax court; or (3) if a petition is filed, the date that the decision becomes final. See Treas. Reg. 1.6015-7(c)(1). Section 6015(f): The Service is prohibited from pursuing certain collection activities against taxpayers who request relief under section 6015(f) in the same manner as discussed above for cases under section 6015(b) or (c), and the collection statute is suspended accordingly, only with respect to liability for taxes arising or remaining unpaid on or after December 20, 2006.
Note:
For section 6015(f) only claims that remained unpaid as of December 20, 2006, the statute of limitations on collection will be suspended beginning December 20, 2006, and not on the date the claim was originally filed with the Service. For section 6015(f) only claims that were full paid before December 20, 2006, the collection statute is not suspended. Refer to Form 8857, "Request for Innocent Spouse Relief," to determine the type of relief the taxpayer elected. The Form 8857 governs the type of relief that the taxpayer requested, regardless of the relief for which the taxpayer is actually eligible. For example, if a taxpayer elected relief under section 6015(b) and (c) but actually is only eligible for relief under section 6015(f) because there is no deficiency, then the collection statute will be suspended as described above in the discussion under section 6015(b) or (c).
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Refer to Document 6209, IRS Processing Codes and Information, (Section 8 Part 1) and IRM Sections referenced in 25.6.9.3 for more information on Transaction Codes, Closing Codes and Definer Codes associated with TC 550.
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Interest may be assessed and collected as long as the underlying tax can be collected. I.R.C. § 6601(g). The Service is not required to make a separate assessment of interest on an assessed tax liability in order to collect that interest. The Service allows interest to accrue unassessed because the computer systems do not have the capacity to continually assess all interest accruals.
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Penalties generally may be collected within ten years from the date of assessment of the penalty.
Note:
The Service is not required to make a separate assessment of the accruals on the I.R.C. § 6651(a)(2) and § 6651(a)(3) additions to tax to collect the accruals. See United States v. Krasnow, 548 F. Supp. 686 (S.D.N.Y. 1982) (involving collection action to collect accruals for the addition to tax under I.R.C. § 6651(a)(3)). The additions could not be given full effect if the Service was required to assess the addition within three years from the filing of the tax return because the addition can accrue over a fifty-month period, which is longer than three years.
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Determine if the CSED will expire within 6 months;
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If the CSED is more than 60 days and the module is in a credit balance, assess the failure to pay penalty and interest on IDRS.
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If the CSED is less than 60 days and the module is in a credit balance, use the manual assessment processing procedures (Form 2859).
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If the CSED is more than 60 days and the module is in a debit balance or the action taken results in a debit balance, assess using the manual assessment procedures and notify the Compliance Service Collection Operation (CSCO) using Form 1725 with all pertinent information.
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Forward all cases that require P&I assessments to CSCO if the CSED is more than 6 months and the module is in a debit balance.
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Do not assess P&I if Federal tax entities are coded "F" .
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See Exhibit 25.6.9–1.