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.