Does an IRS installment plan extend the 10 year collection statute?

Posted by Michael S. Anderson | Aug 09, 2013 | 0 Comments

An ongoing IRS Installment Plan doesn't extend the IRS Statute of Limitations period for the collection of debt.

The IRS has 10 years to collect a tax debt.  The 10 year period begins on the date the tax balance is “assessed”. The tax is usually assessed when the IRS processes the tax return.

If your 2004 tax return was received by the IRS and processed on April 16 of 2005, for example, then the statute period would expire on April 16th of 2015.  If you filed the return on April 16 of 2010, and the debt was assessed on June 12, 2010, then the statute would expire on June 12 of 2020.

Certain actions extend this 10 year statute period.  Bankruptcy, Offer in Compromise, and certain appeals will all extend the time-frame.

An Installment Agreement after set up, doesn't do it.  When the statute period ends, the debt is gone and the Installment Agreement will end.

It is important as a result to understand two things before you file an Offer in Compromise, Bankruptcy, or an appeal.

1.   How much will the IRS installment agreement be per month.

2.   When will the IRS Statute of Limitations period end.

It often makes sense to simply negotiate an "Ability to Pay" Installment Agreement and wait for the Statute to run.

An example:

Mr. Smith owes the IRS $60,000.00 related to a failure to pay tax on an investment he cashed out in 2007.  He filed his return in April 2008 timely and just recently the IRS began to levy his paycheck.

Given his current income, budget and asset situation, he was able to arrange a payment to the IRS of $250.00 per month.  He doesn't expect his income or budget to change in the near future and the Statute of Limitations date will run in April of 2018 or 10 years from the date the tax on the 2007 debt was assessed.

$250.00 dollars per month multiplied by the remaining time left in the statute period means that Mr. Smith will only pay about $15,000.00 of the $60,000.00 balance.

Written By:

Anderson Tax Law 2158 N. Gilbert Rd. Ste 101 Mesa, Arizona 85203

Phone: (480) 507-5985 Fax: (480) 507-5988 Email: [email protected] Website:

About the Author

Michael S. Anderson

Michael Anderson has been representing Arizona clients with tax debt problems for two decades and has helped his clients eliminate millions of dollars in tax debt. His tax debt practice is limited to helping individuals and the self-employed who have serious IRS problems.


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