Glossary

Statute of Limitations on Tax Debt

The statute of limitations on tax debt limits the time the IRS has to collect unpaid taxes. Generally, the IRS has 10 years from the date the taxes were assessed to collect the debt, after which the debt is no longer legally enforceable. This period is known as the Collection Statute Expiration Date (CSED).

However, certain actions can extend or suspend the statute of limitations, including:

Filing for bankruptcy.
Submitting an Offer in Compromise.
Requesting an Installment Agreement.
Leaving the country for an extended period.

If the statute of limitations expires before the IRS collects the debt, the taxpayer is no longer required to pay the remaining balance. However, the IRS often takes aggressive actions, such as filing liens or levies, before the expiration to ensure payment.

Taxpayers should monitor their CSED date and be aware of any actions that may extend the statute of limitations.

Recommendation

CP148 Notice

IRS CP148 is sent to taxpayers when there is a mismatch between the name or Social Security Number provided on the return and the IRS’s records.

CP297B Notice: Final Notice of Intent to Levy and Right to a Hearing

IRS CP297B Notice informs taxpayers that the IRS intends to levy their property or wages unless they resolve their unpaid tax debt and outlines their right to a hearing.

Letter 2274C: Warning of Intent to Terminate Installment Agreement Due to Default

IRS Letter 2274C informs taxpayers that their installment agreement is in danger of termination due to default and provides steps to reinstate it.

CP10 Notice: Changes to Your Tax Return

The IRS CP10 Notice informs taxpayers of corrections made to their tax return that may impact their refund or balance owed.

Failure to Deposit Penalty

The Failure to Deposit Penalty is imposed on employers who fail to make timely federal tax deposits for payroll taxes, resulting in fines and interest charges.

Currently Not Collectible (CNC)

Currently Not Collectible (CNC) status temporarily suspends IRS collection actions for taxpayers who cannot afford to pay their tax debt.

IRS Audit

An IRS audit is a review of a taxpayer’s financial records and tax return to ensure compliance with tax laws, often triggered by errors or inconsistencies.

CP90 Notice – Final Notice of Intent to Levy and Notice of Your Right to a Hearing

IRS Notice CP90 is the Final Notice of Intent to Levy, which gives you the right to a hearing before the IRS seizes your assets to satisfy unpaid tax debt.

Levy Release

A levy release stops the IRS from seizing assets, such as wages or bank accounts, to satisfy unpaid tax debt.

CP39 Notice

IRS CP39 notifies taxpayers that their current-year refund has been applied to a prior year’s unpaid tax debt.