Congress limited the time the IRS has to collect an old tax debt. Once the tax has been assessed, the collection clock begins to run. When it runs out, the IRS can no longer take action against a taxpayer and the debt is discharged in IRS records. The end of this collection period is called the CSED or “Collection Statute Expiration Date”. 26 U.S.C. § 6502 of the Internal Revenue Code governs the time for collection but other statutes may extend the time for collection in various circumstances.

The IRS collection statute is suspended during the period of time an offer in compromise is pending, for 30 days after the offer has been rejected, and during any time an appeal of the rejection is pending. In addition, § 6503(h) CSED for the period of time during which the IRS is prevented from collecting a tax due to a bankruptcy proceeding, plus an additional 6 months after the bankruptcy stay has been released.

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When a taxpayer is outside of the United States for a continuous period of at least 6 months, the collection statute is suspended for the time during which the taxpayer is out of the country.

The period of time for collection can be extended: It is possible to extend the collection period voluntarily if the taxpayer signs an agreement to do so. The IRS can further extend the collection statute if, before the collection statute expires, a Federal Court proceeding is commenced to reduce the amount of tax due to a judgment. Once the judgment has been entered, the IRS can use it to collect the debt for an additional extended period.