Does IRS Debt Go Away?

Owing money for delinquent taxes can be a stressful situation that may stick around for years. While back taxes don’t necessarily stay with you forever, the law does give the Internal Revenue Service (IRS) at least 10 years to collect that debt. 

But what happens after that? Does IRS debt go away after some time, or is there another step in the tax debt collection process?

Below, we’ll examine how long a tax liability can take you, what rules the IRS must adhere to when collecting taxes, how to get out of tax debt, and what an unpaid tax bill can mean for you and the rest of your assets.

Does IRS tax debt ever go away?

IRS tax debt can go away, but it typically takes 10 years before the Internal Revenue Service will stop pursuing your debt.

Every tax liability has a Collection Statute Expiration Date, or CSED. This CSED date is the government’s statute of limitations on your debt or the maximum period that the IRS has to try to collect the debt.

Each tax liability has its own CSED, calculated from the tax assessment date. The clock starts ticking on the day the IRS calculates your tax debt, regardless of whether you filed a tax return. The CSED for that tax liability is 10 years from the assessment date.

This 10-year rule applies to tax debts that arise from:

• Returns that you voluntarily file with the IRS
• Amendments to returns that you voluntarily file
• Substitute returns that are filed after you fail to file a return with the IRS
• Audits and penalties

If you file your taxes using false or fraudulent information, and the correction of this information results in an increased tax liability, a new CSED would begin on the date the IRS makes the correction.

With all of that said, the 10-year rule is really a general guideline. This timeframe can be both suspended, temporarily or permanently or extended, depending on the circumstances.

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How Long Does an IRS Tax Lien Last?

Can tax debt collection be paused or extended?

Different situations could result in the suspension of your CSED, during which the IRS cannot collect tax debt. However, the IRS may also extend the CSED, giving them more than 10 years to collect that debt.

During a suspension, the IRS cannot actively attempt to collect the debt. However, if that specific situation ends, such as failing to follow through with a payment plan, the IRS can resume collection activity. In this case, the remaining time left on the original 10-year CSED starts ticking again. 

Here are the various instances when that tax debt collection might get paused or extended.

Action	Initial suspension	Extension
Filing for bankruptcy	During settlement	6 months after conclusion
Applying for installment agreement	During application review	30 days if you withdraw or application is rejected
Submitting Offer in Compromise (OIC)	During application review	30 days if application is rejected
Filing for innocent spouse relief	For 90 days and then during court ruling	60 days, regardless of ruling
Living outside the U.S.	During time living abroad, if 6 months or more	Extended upon return for at least 6 months
Entering a combat zone	During time in combat zone, plus 180 days	N/A
Serving in the military	During service, plus 270 days	N/A

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How to Get Rid of a Tax Lien

Filing for bankruptcy

Filing for bankruptcy is a big deal, but it can help you if you’re drowning in tax debt—and can result in both suspensions and extensions:

• Suspension: From the date you petition for bankruptcy until the date the court settles the filing (whether discharged, dismissed, or closed), your CSED is suspended.
• Extension: The IRS will then add six months to your CSED from the conclusion of your bankruptcy.

Applying for an installment agreement

If your tax debt seems insurmountable, you may be able to get on an installment plan with the IRS, much like a personal loan.

• Suspension: If you apply for an installment agreement, the IRS will suspend your CSED while reviewing your application, ultimately accepting or rejecting it. You have the right to appeal a rejection—which will continue the tax debt suspension until the appeal is resolved.
• Extension: If you withdraw from consideration or the IRS rejects your application, the IRS will extend your CSED by 30 days.

Submitting an Offer in Compromise

Similarly, you can file for an Offer in Compromise (OIC) if you owe a significant amount of back taxes and know you can’t pay the total amount.

• Suspension: The IRS will suspend your CSED while they review your application. If your application is rejected and you appeal the decision, your tax debt will continue to be suspended.
• Extension: If your OIC is rejected, the IRS adds 30 days to your CSED.

Filing for innocent spouse relief

In very specific circumstances, you may avoid paying additional taxes if your spouse filed a joint tax return without your input and contained errors.

• Suspension: If approved, your CSED is suspended until you file a waiver or at the end of the 90 days to petition the tax court. The CSED remains paused until the court makes a final decision.
• Extension: The CSED is extended by 60 days, regardless of the decision.

Living outside the United States

Living outside the country for six months or more can affect IRS tax debt collection.

• Suspension: Typically, the IRS suspends tax debt collection during your time living abroad.
• Extension: However, when you return to the U.S., the IRS will extend your CSED by at least six months.

Entering a combat zone or serving in the military

Entering a combat zone or serving in the military can also result in the suspension of tax debt collection. There are no extensions associated with these scenarios.

• Entering a combat zone: The IRS suspends your CSED for the entire duration you’re in a combat zone, plus 180 days.
• Serving in the military: Military members have their CSED suspended during service, plus 270 days.

How do I find my tax balance and expiration date? 

If you have a tax liability, knowing how much you owe and how long the IRS can attempt to collect it is important. You can find both of these pieces of information in your account transcript from the IRS.

A tax account transcript contains information such as your filing status and taxable income. Still, you can also use this document to review past transactions, which will detail any amount owed and the date the money is due (the CSED).

Here’s what a sample tax transcript looks like:

Source: Fictional IRS account transcript from the IRS

Not sure how to get your account transcript? The IRS offers multiple ways to get your hands on this important document. 

By phone

The first option is to call the IRS and request information on the tax debt as well as the original date of assessment. From that date, you can calculate the original CSED, assuming there haven’t been any suspensions or extensions. Taxpayers can call the IRS at 800-829-1040.

If you are working with a third party—such as a tax preparer or other professional—they can call the Practitioner Priority Service (PPS) on your behalf to request a transcript. This report will outline each of your tax liabilities as well as when the debt was originally assessed.

Online

Phone lines at the IRS are often backed up, so service can be limited. For this reason, requesting a tax transcript online may be the fastest and easiest way to find your total tax liability and the statute of limitations on that debt. To complete this request, you must create an account if you don’t have one already and verify your identity.

By mail

Lastly, you can request that a tax account transcript be sent to you by mail. This is generally not as quick as getting one online but may be easier for some taxpayers. Requesting a transcript by mail can be done by calling the IRS at 800-908-9946 or by submitting an online form.

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How to Check Your Tax Balance

What do I do if I owe the IRS?

Option	Best for
Offer in Compromise	When you can’t repay your IRS debt
Installment agreement	Obtaining more manageable payments over a set amount of time to repay your debt
Penalty or interest abatement	If you are responsibly making payments and could use a little more relief
Third-party help	When you are overwhelmed and confused by the tax relief process

If you owe money to the IRS for delinquent taxes, you might be unsure of what to do or how exactly to handle your debt. One of the worst things you could do is wait for the IRS to chase you down for payment. 

The IRS can create a lot of headaches in the form of tax liens and levies in pursuit of your back taxes, and you’ll accrue all sorts of penalties and interest charges. 

Instead of ignoring an IRS tax debt, consider your options for tax relief. These could include requesting:

An Offer in Compromise

If paying your tax debt would result in financial hardship, you may be eligible for an Offer in Compromise (OIC). This enables you to settle your debt with the IRS for less than you owe, considering factors such as your income, expenses, and asset equity.

Not every OIC request is approved. In fact, the IRS generally accepts only one in three applications. If approved, you’ll either:

• Make a lump-sum payment of 20% of the total amount offered, then pay the remaining balance in five or fewer payments.
• Agree to periodic payments over a set number of months agreed to with the IRS.

Note: It costs $205 to file for an OIC.

An installment agreement

Setting up an installment agreement plan with the IRS not only allows you to spread your payments over a manageable period of time but also suspends collection activity and possible levies in the interim.

There are short- and long-term payment plans depending on how much you owe. It’s important to note that setup fees for the installment plan and interest on the balance still apply.

A penalty or interest abatement

If you have already established a payment plan for your current debt, you may be able to get some or all of your penalty and interest charges waived.

These added fees can be reduced or removed for certain taxpayers who qualify for first-time penalty abatement and even in cases where the taxpayer believes that they received incorrect verbal advice from an IRS administrator.

Third-party help

You may also consider hiring a third-party tax relief company to work on your behalf. These firms offer professional guidance throughout the tax debt process and help taxpayers apply for an Offer in Compromise or seek penalty abatement.

But there are costs involved with hiring one of these companies, and there is still no guarantee of tax relief. 

Be proactive about IRS debt

Owing money to the IRS can be costly and downright scary. While an IRS tax debt will eventually expire, the road to the end of that statute of limitations can be treacherous.

Rather than ignoring your tax debt, consider whether you can use the many tools and services available to manage or reduce what you owe.