Tag Archives: CSED

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Over the years we have seen people spend hours fighting over a $100 over charge by their credit card company, yet spend little to no time learning how to reduce their tax bill by thousands of dollars.  This little 10 page guide will take you less than 15 minutes to simply read from end-to-end.  It will take you a little longer to figure out what applies to your situation, but in the grand scheme of things it will still only be a few minutes.  But if you do the above two things, you may be able to literally shave thousands, if not hundreds of thousands of dollars from your future tax bills!

If you  go here and put your email address in the box, we’ll rush you this information packed guide for absolutely, certifiably the best price on the entire planet Earth; FREE!  Can’t beat that right?

What’s even better is that we’re 100% positive that you can find something in this guide that you can use.  Furthermore, these aren’t just some “foo-foo” list of tax strategies that you can find out on the internet.  No, these are proven strategies developed/researched over many years that are often overlooked, forgotten or simply not implemented.  Want a sample of what’s inside?  Here is just a taste of what you’ll get:

Business Start-Up Costs: Start-up costs are amounts paid or incurred for: (a) creating an active trade or business; or (b) investigating the creation or acquisition of an active trade or business. The fees you pay for can be written off/amortized over a period of 60 months or more.

Alimony: You may deduct the amount of alimony or separate maintenance in the year paid BUT, you must include in income the amount of alimony or separate maintenance you received.

IRS Statute of Limitations: Did you know the IRS only has 10 years from the date the tax is assessed to collect it?  But the IRS won’t tell you to stop paying them if the statute has expired; you’ll just have to know that you don’t have to pay them anymore.  Learn more in our post here.

Employing Your Children: You can hire and pay your children a reasonable salary to work in your business. Just make sure the job is within their ability and documented with a job description.  What’s more is the first $6,100 in wages (in 2013) will not create a tax liability for the child AND you can still claim them as a dependent on your tax return!

Business Clothing: Are you required to wear certain clothes as a condition of performing your job?  If they are not reimbursed by your employer AND not suitable for everyday wear, then the expense is tax deductible.  Wear a suit to court as an attorney?  Sorry, the IRS will probably disallow the expense if you claim it.

Tax Debt and 10 Year Statute of Limitations

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Many taxpayers, and some practitioners, are unaware that the Internal Revenue Service (IRS) by law only has 10 years’ time to collect a tax debt.  This is referred to as the statute of limitations or in IRS speak, the Collection Statute Expiration Date or CSED for short. This post will talk about what the CSED is, how to obtain it, what can change its date and how to stop paying taxes once it expires.

How Long Can the IRS Collect a Debt?
Per Internal Revenue Code (IRC) Section 6502, the limit on the IRS’ ability to collect a debt is 10 years. However, as we discuss below, most of the “popular” legal methods used to deal with tax debt also stop the CSED “clock” from running. In some cases it actually makes more sense for the taxpayer to just let the clock run.

When Does the Clock Start?
The 10-year period begins to run with the date of the “assessment” of the tax, not the tax year for which taxes are due. For example, if a return for 2012 is not filed until 2014 and the tax is assessed in 2014, the 10-year period begins to run in 2014 and expires in 2024.

The date of assessment is the date the tax liability is assessed on a particular form at an IRS Service Center. When the applicable form is signed by an IRS official, the 10-year period for that tax liability starts to run. When interest and late payment penalties (as well as other penalties) related to that tax year are tacked onto the underlying tax debt, they too must be collected within the same 10-year period.

If you never filed a tax return, but the IRS filed one for you (i.e. using a Substitute for Return or SFR), then the statute of limitations began to run whenever that assessment was processed by the IRS on your behalf.

How Can I Find Out My CSED?
To determine when the CSED began for a particular liability, the best approach is to obtain a transcript of the taxpayer´s IRS account. Transcripts should exist for each tax year and provide basic information such as the date of assessment, date of filing, and tax liability.

Taxpayers can request account transcripts on their own behalf by filing IRS Form 4506-T or requesting them online.  You can then attempt to analyze the data, perform the necessary calculations and hope you arrive at the correct answer.

Another method of calculating the CSED is to look at the “Date of Assessment” for a particular tax period if you have received IRS Form 668 (Y)(c) – Notice of Federal Tax Lien.  You would then calculate out approximately 10 years from this date to see when the CSED expires.

My Tax Debt Is Older Than 10 Years But The CSED Hasn’t Elapsed. Why?
While the IRS only has ten years to collect a debt, there are certain factors that can extend or pause the CSED. This is known as “tolling the statute of limitations.” Events that stop or “toll” the statute of limitations include:

  • Filing Certain Appeals – in most cases, the statute also doesn’t run the entire time an IRS Appeal is pending.
  • Filing an Offer in Compromise (OIC) – the statute of limitations does not run the entire time your Offer is under review, including any Appeals that you exercise, plus an additional 30 days.
  • Filing a Lawsuit Against the IRS – the statute of limitations does not run while litigation against the IRS is pending.
  • Filing Bankruptcy – the statute of limitations does not run the entire time you are under the protection of the bankruptcy courts or for the six months following the discharge or dismissal of the bankruptcy.

If you exercised any of these options in the past, there was probably a period of time when the statute was not running.  Said another way, during any time period in which the IRS is legally unable to pursue you for collection of the debt, the statute of limitations is not running.  For a complete list of tolling events and the associated time, check out IRS Publication 594 and look at “How Long We Have To Collect Taxes.”

Will the IRS Notify Me Once the CSED Elapses?
No, the IRS is not required to notify you once the debt has expired.  However, they are not legally allowed to pursue collection of the debt.  Thus, you will usually just stop hearing from them if your debt has expired.

My CSED Has Elapsed – Now What?
If the CSED has elapsed, congratulations! All that remains is cleaning up the chaos that your tax problem left in your life. You will need to ensure that a TC 608 credit to zero out the debt has been entered into the IRS system. You should also ensure that a Release of Federal Tax Lien is filed so that you can begin the process of repairing your credit.

My CSED Has Not Elapsed – Now What?
If your CSED hasn’t elapsed, but it is getting close, the best thing to do might be to get a plan in place with the IRS to ensure you’re protected from aggressive collection action.  This may include entering into a monthly payment plan or negotiating for your account to be placed into currently not collectible status (a “temporarily” status where you aren’t required to pay the IRS).

Do YOU Need Help With Your IRS Debt?
While you could go through the hassle of calculating your CSED, do you really want to?  For a flat $50 fee, and us filing a few forms with the IRS (with your consent), we’ll look at however many years you want to analyze, and provide you with a comprehensive report that will include:

  • Total tax assessment, penalty, interest and accrual amounts for each year (so you know how much you really owe)
  • CSED calculations for each year requested
  • Tolling events (if any) and the days your CSED has been extended
  • All IRS notices sent/received for each year
  • IRS account activity by year
  • And much, much more (we promise)

Call us at (773) 239-8850 or click our email address at the bottom of this screen to get started.

By the way, this post (the one you’r reading) is by far the most viewed on our site.  Why?  Because many people have tax issues that they want to resolve.  If you have old tax returns that need to be filed or want to learn how a professional can help you with your situation, why not visit our sister site File Old Tax Returns?  You might be surprised to learn that we may be able to help you out for less than you are thinking.  Plus, hear some valuable information on your taxpayer rights from the IRS Commissioner himself!