The following is an excerpt from:

"For Whom the Tax Tolls: Significant Events That Extend IRS Collection Rights"

Published in Tax Practice & Procedure - October/November 2004

By Michael S. Fried and Zachary S. Fried

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Statute of Limitation on Collection

Pursuant to Code Sec. 6502, the statutory period during which the IRS is permitted to collect a delinquent income tax or trust fund recovery penalty is 10 years from the date of its assessment. However, this 10-year collection statute of limitations can be extended for additional periods by a number of different events. For example, the filing of an offer-in-compromise or bankruptcy, an application for a Taxpayer Assistance Order, a taxpayer?s absence from the country for more than six months, a voluntary waiver of the statute of limitations, a Collection due process appeal (appeal of the filing of a lien filed by the IRS pursuant to Code Section 6320 or a proposed levy made pursuant to Code Section 6330) will all result in extending the collection statute of limitations, each for different extension, or tolling, periods. The date on which the 10-year IRS collection period ends, as extended by these various tolling events, is referred to as the collection statute expiration date (CSED). Many times, particularly in connection with the collection of a trust fund recovery penalty, the IRS will engage in aggressive collection activity close to the CSED. It is important to note that trust fund recovery penalties are not dischargeable in a bankruptcy, and expiration of the collection statute of limitations will sometimes be the only viable solution in connection with the client?s trust fund recovery penalty problem.

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