The collection statute of limitations, in a case under the Bankruptcy Code, is suspended while the Service is prohibited by reason of the case from collecting, and for 6 months thereafter. For more information see IRC 6503(h)(2). Thus, the collection statute of limitations is generally suspended while the automatic stay imposed by the bankruptcy is in effect. Even if the suspension of the collection statute under IRC 6503(h) no longer applies, the collection statute still may be suspended when substantially all the debtor’s assets remain in the custody or control of the bankruptcy court under IRC 6503(b).

A TC 520/521 extends a CSED by the amount of time from the transaction date of a TC 520 (posted Cycle 8624 or later) to the transaction date of the associated TC 521, plus six months.

A TC 520 with a closing code 60 through 67, 83, and 85 through 89 suspends the CSED unless a TC 550 (new CSED) is posted with a later transaction date. For more information see IRM 5.17.8.28 and IRM 5.9.4.2

The period of limitations on collection is suspended in respect of any penalty under IRC 6700, IRC 6701 or IRC 6702 for the period during which the Service is prohibited from collecting by levy or a proceeding in court. The statute of limitations for collection is found in IRC 6502. When a suit to reduce the tax lien to judgment is in the government's interest, it must be filed prior to the statute's expiration. The filing of a suit to reduce the tax lien to judgment will suspend the collection statute during litigation. For more information see IRM 5.17.3.1.3.5(13) and IRM 5.17.4.7(1)

TC 520 with closing code 70 through 75 does not suspend the CSED.

TC 520 with closing code 76 through 81 and closing code 84 suspends the CSED, unless a TC 550 (new CSED) is posted with a later transaction date.

The CSED is suspended from the date the Service receives a timely filed request for a CDP hearing to the date the taxpayer withdraws their request for a CDP hearing or the date the determination from Appeals becomes final, including any court appeals. If 90 days is not remaining on the statute of limitations when the determination becomes final, the statute of limitations is extended to equal 90 days. The collection statute is not extended for equivalency hearings. For more information see IRM 5.1.9.3.6 and Treas. Reg. § 301.6330–1(g)(3), ex.1

For offers pending prior to 1/1/2000, the CSED extension was impacted by Treasury Regulation § 301.7122–1(f) (1960). Under this regulation the practice of the Service generally was to obtain from the taxpayer a waiver of the collection statute for the period the offer in compromise was being considered, while any term of an accepted offer was not completed, and for one additional year.

Under the IRS Restructuring and Reform Act of 1998 (RRA 98) the waiver cannot extend the collection statute expiration date (CSED) beyond either 12/31/2002 or the original CSED, whichever is later. Suspensions of the running of the collection statute in the offer in compromise context are governed by statute, specifically by IRC 6331(k)(1) and (3). Under these provisions, the Service is prohibited from levying, and the running of the collection statute is suspended, while an offer is pending with the Service, for 30 days immediately following a rejection of the offer, and for the period that a timely filed appeal of a rejection is being considered in Appeals. CSED extensions for the period of time "while any term of an accepted offer is not completed" and "for one additional year" are eliminated.

The Community Renewal Tax Relief Act of 2000, effective December 21, 2000, eliminated the suspension of the statutory period for collection while offers and installment agreements were pending.

The Job Creation and Workers Assistance Act of 2002 reinstated the statute suspension with respect to both offers and installment agreements. With respect to offers, the collection statute is again suspended beginning March 9, 2002 for the number of days the offer remains open from March 9, 2002, for the number of days the offer is pending, for thirty days after rejection of the offer, and for the period that a timely filed appeal of a rejection is being considered in Appeals.

Cases may be encountered where prior rules were in effect. The following chart shows the changes that have occurred in this area.

If only one party to a joint assessment files an offer, then the statute is suspended just for that person.

For more information see IRM 5.8.10.7

Form 900 Waiver will only be executed in connection with granting a partial payment installment agreement and only in certain situations (See IRM 5.14.2.2.IRS Policy dictates Form 900 Waiver is limited to no more than five years, plus up to one year to account for changes in the agreement. Effective March 9, 2002, the CSED is suspended during:

For more information see IRC 6159(a), IRC 6331(k), IRC 6502(a), and IRM 25.6.18.3.2.1

Collection by levy or a proceeding in court against a spouse is suspended for the requesting spouse when he or she makes an election under IRC 6015(b), and/or IRC 6015(c).

The collection period is suspended from the filing of the claim until a waiver is filed or until the expiration of the 90 day period for petitioning the Tax Court, or if a Tax Court petition is filed, when the Tax Court decision becomes final, plus in each instance, 60 days.

A request for relief made solely under IRC 6015(f) does not require suspension of collection activity and does not extend the collection statute.

If a request for relief is made in response to collection due process procedures, there is also suspension of collection activity and the collection period provided for by IRC 6330(e) for the pending of any administrative hearings and appeals therein regarding the levy. The rules for suspension under IRC 6330 differ from IRC 6015. In general, the latest suspension of collection and the collection period should control, which may require analyzing the suspension under both IRC 6015 and IRC 6330 where relief from joint and several liability is requested as part of an IRC 6330 hearing.

If the requesting spouse signs a waiver of the restrictions on collection, the suspension of the period of limitations on collection against the requesting spouse will terminate 60 days after the waiver is filed with the Service, limiting the CSED extension to the period from when the claim was filed to the time the waiver was signed, plus 60 days. For more information see IRM 25.15.8.

The period of limitations on collection after assessment is suspended while the taxpayer is outside the United States if the absence is for a continuous period of at least six months per IRC 6503(c). To make certain that the Government has an opportunity to collect the tax after the taxpayer's return, the period does not expire (where the taxpayer has been out of the country for six months or more) until six months after the taxpayer's return to the country. For more information see IRM 5.17.3.1.3.5(9)

The deadline for certain acts performed by taxpayers and the Service is postponed when the taxpayer serves as follows:

The acts specified in IRC 7508include paying income, estate, or gift tax, and collecting any tax. The regulations under IRC 7508expand the list of covered acts to the payment of employment tax and most excise taxes. (Also, Rev. Proc. 2004-13, or its successor, expands the list provided in the statute and the regulations.) A deadline is postponed while the taxpayer serves in the area or operation and for any period of continuous hospitalization from such service (limited to five years of hospitalization in the United States), plus 180 days after the last day of service in the area or operation or period of hospitalization. See IRC 7508(e) for exceptions concerning tax in jeopardy, cases under title 11 of the USC (bankruptcy), and transferred assets. For more information see IRM 5.1.7.7.

The combat zone or contingency operation freeze code suspends the CSED and can be set in two ways:

Once the a taxpayer has been in a Combat Zone the "-C" freeze remains on the account for historical purposes, even with accurate entry and exit dates.

Under the Servicemembers Civil Relief Act (referred to as Section 510, Title 50 Appendix), the collection of any income tax due from any person in the military service, whether falling due before or during military service, may be deferred up to 180 days if ability to pay the tax is materially impaired because of that person's military service. The CSED is suspended during the taxpayer's military service and for an additional 270 days afterward.

Transaction Code 500 with Closing Code 51 suspends the CSED for a Military Deferment. For more information see IRM 5.1.7.7.4 and IRM 5.19.1.7.9.1

A wrongful levy suspends the running of the period of limitation on collection pursuant to IRC 6503(f)(1) The collection statute is suspended from the date property (including money) of a third person was wrongfully seized or received, to the date the property is administratively returned pursuant to IRC 6343(b), or to the date on which a wrongful levy judgment with respect to such property becomes final, and for 30 days thereafter. Where the period of limitations is suspended under this provision, it is suspended only for the amount of money or value of specific property which initially has been wrongfully taken from a third party and subsequently is returned. This amount or value is determined as of the date the property was returned. For more information see IRM 5.17.3.1.3.5(10)

A wrongful lien suspends the running of the period of limitations on collection. The collection statute is suspended from the date any person becomes entitled to a certificate of discharge of lien under IRC 6325(b)(4) until 30 days after the earlier of the earliest date on which the Service no longer holds any amount as a deposit or bond under IRC 6325(b)(4) or the date on which a judgment under IRC 7426(b)(5), concerning the amount deposited or used as bond, becomes final. Where the period of limitations is suspended under this provision, it is suspended only for the value of the interest of the United States in the property plus interest, penalties, additions to tax, and additional amounts attributable thereto. See IRC 6503(f)(2). For more information see IRM 5.17.3.1.3.5(11)

When payment of the estate tax is deferred under IRC 6166, the lien under IRC 6324(a) attaches specifically to the property described on Form 668–J, Estate Tax Lien. The deferral period and subsequent installment agreement may last up to 15 years. The CSED for collection of the deferred estate tax is suspended for the period of any extension of time to pay elected under IRC 6166. The executor and all parties having any interest in the property must agree, in writing, to the filing of the IRC 6324(a) lien. Ideally, the agreements are secured at the time the 6166 election is approved. If not secured at the time of approval, they may also be secured at any time when an extension request under IRC 6161 to pay an annual IRC 6166 installment payment is applied for by the estate. If no agreement is secured then only the absolute 10-year IRC 6324 lien applies. Area Technical Services (Advisory) files Form 668–J after all required signatures have been secured agreeing to the lien. For more information see IRM 5.5.6 and IRM 5.5.8

The tax liens under IRC 6324(a) and IRC 6324(b) expire exactly 10 years from the decedent's death or the date of the gift, respectively, whether or not any action for the collection of such tax has been commenced or the CSED under IRC 6502 remains open.

IRC 7811(d) requires the suspension of the applicable statutes of limitations (assessment and collection) on the filing of Form 911, Application for Taxpayer Assistance Order (criteria one through seven) signed by the taxpayer or duly-authorized representative when the request for relief involves an action described in IRC 7811(b). For more information see IRM 13.1.14.1

See IRM 7.27.15.3.4 regarding excise taxes.

When a taxpayer fails to file a timely income tax return or files a false or fraudulent return, the Service may execute a return under the authority of the IRC 6020(b) deficiency procedures. If the taxpayer fails to respond to the 90 day notice, the Service makes a deficiency assessment. The Service may also make a deficiency assessment if the deficiency is upheld by the Tax Court. Upon that assessment, the 10 year period of limitations on collection, provided for in IRC 6502(a)(1)begins.

If the taxpayer later files their own "original" return showing a tax liability smaller than the assessed liability, and that return is accepted by the Service as filed, the tax liability may be reduced to show the amount of tax reflected on the taxpayer's return. The original CSED date remains intact.

If the taxpayer's "original" return reflects more tax than that assessed from the statutory notice based on the section 6020(b) return, then an additional assessment is input for the increased amount. In this scenario, the original CSED remains intact and a second CSED will be systemically established based on the additional assessment.

Revenue Officers are responsible for monitoring their own imminent CSEDs. Some of the various ways to do this are:

Imminent CSED accounts should be worked to an appropriate conclusion prior to the statute expiration whenever circumstances permit. Appropriate case actions on imminent CSED accounts depend on the specific facts of the case.

Newly received imminent CSED accounts should receive taxpayer contact as soon as possible.

Timely follow-ups should be made and there should be no lapses in case activity.

Imminent CSED accounts sometimes include modules that do not have imminent CSEDs. It is important that all modules are worked appropriately. However, low dollar imminent CSED accounts should not receive undue or excessive attention simply because the collection statute is imminent.

Cases should not be closed with an inappropriate Currently Not Collectible (CNC) closing code merely because an imminent CSED is about to expire on one or more modules. If an investigation has been completed prior to the expiration that shows the account to be truly uncollectible, based on the facts of the case, all modules should be reported as such under the appropriate CNC closing code as directed in IRM 5.16.1.

Upon receipt of an imminent CSED module, or when CSED(s) become imminent, the revenue officer and group manager will discuss the imminent CSED(s) during the first Collection Consultation (CC) following receipt and agree on the most appropriate plan of action based on the facts of the case. During the CC, the group manager will document the initial plan of action in the case history. If the revenue officer receives a case with 120 days or less left on the CSED, the revenue officer will make an immediate appointment to discuss the case as an ad hoc CC.

During subsequent Collection Consultations or as facts warrant, the revenue officer will keep the group manager advised of the progress of all imminent CSED modules.

When 120 days remain until CSED, the group manager will notify the territory manager via secure E-mail advising of the imminent CSED and to review the case history for documented plan of action to resolve it. The group manager will provide an electronic copy of the E-mail to the revenue officer to place in the case file.

If the revenue officer has taken all appropriate case actions without resolving the imminent CSED module prior to expiration, it may be permissible to let the collection statute expire in inventory with the group manager's prior concurrence.

The revenue officer must document the case history with a summarizing statement that contains the specific MFT, Tax Period, Amount, CSED and facts to support the decision prior to statute expiration.

The group manager will review the summary and case history. If the group manager does not concur, the group manager and revenue officer will discuss and document a new plan of action.

If a collection statute expired without the group manager's prior concurrence or due to inappropriate case actions, the revenue officer will enter a statement in the case history addressing the reasons why the statute expired. The statement should include any unusual or mitigating circumstances. The group manager will review the summary, case history, and any other relevant information to determine if further administrative action is warranted, and whether disciplinary action is appropriate. The group manager will prepare a memo to the territory manager detailing why the CSED expired, why further administrative action is or is not warranted, and to include discipline if appropriate. The territory manager will review the memo and determine if it should be forwarded to the area director for recommended potential disciplinary action.

Statute expiration will normally generate a TC 608 credit to zero out a module within several cycles. Therefore, in most instances, it is not necessary to prepare a Form 53 to report an expired CSED account.

In some instances, such as non-master file and filing a suit, it will be necessary to prepare a Form 53 using closing codes 04 or 05. For more information see IRM 5.16.1.2.2.2