At EA Tax Resolutions we teach our clients in Orange County, CA about the IRS 10-year collection statute and the importance it has on our strategy to resolve their back taxes.
The IRS has 10 years to collect on your tax debt after the tax has been assessed. Once that 10-year mark runs up, you are clear and free of that tax debt. Now, many people might think they can run from the IRS until the 10-year mark, however this is not easy to do, and not something we recommend. However, the 10-year collection statute, or as the IRS like to call it the Collection statute expiration date (CSED), has a very important role in the process of resolving our tax debt.
The reason we always have the CSED in mind when planning a strategy to resolve back taxes is because the IRS uses this date when figuring any resolution option. Weather that be a settlement option in the Offer in Compromise or a Payment Plan, the IRS is always going to look at if the debt can be repaid within the 10-year collection statute.
For this very reason, we can take different paths to resolve your debt based on the CSED. If your tax debt is very old and the CSED is coming soon, the Currently Non-Collectible Status option might be the best route to take. This can potentially get rid of your tax debt in full if we can maintain the non-collectible status until the CSED.
On the other hand, if you tax debt is recent, the payment plan or an offer in compromise might be a better route to take. Now even though an offer in compromise can have you pay your tax debt for less than the amount you owe, you have to keep in mind that during the application process (which can be 1-2 years) the collection statute will be put on pause. So, if your offer does not get accepted, you could have potentially added an additional 1-2 years to the 10-year collection statute.
If you are looking for some help with your tax situation, or figuring the 10-year collection statute with the IRS, contact our office today.
Anthony Fontana EA
4630 Campus Dr #203
Newport Beach, CA 92660