The IRS generally has 10 years – from the date your tax was assessed – to collect the tax and any associated penalties and interest from you. This time period is called the Collection Statute Expiration Date (CSED).
A variety of laws affect the CSED. More than one action or situation can change the collection period. See Examples of situations that add to the 10-year expiration date.
How Long Will the IRS Give Me to Pay Back Taxes?
Owing back taxes to the IRS can be an incredibly stressful and worrying situation. The thought of accumulating interest and penalties or facing aggressive collection actions is enough to keep anyone up at night. However, there are options available to give you more time and flexibility for paying off tax debt to the IRS. Understanding the payment timelines and programs offered by the IRS is crucial if you find yourself unable to pay your tax bill in full by the filing deadline.
The Most Important Timeframes for Paying Back Taxes to the IRS
The IRS provides taxpayers with a few different timeframes for paying back taxes, depending on specific circumstances:
The 120 days and 72 month timeframes provide the most flexibility, allowing taxpayers to set up formal payment plans with set monthly amounts owed. However, it’s important to note that interest and penalties continue accruing during these extended payment periods until the balance is paid off entirely.
Options When You Can’t Pay Your Taxes on Time
Many taxpayers find themselves unable to pay their full tax bill when it comes due on April 15th each year. If you are in this situation, it is imperative that you are proactive in communicating with the IRS and setting up a payment solution. Here are a few options to consider:
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Request an extension – Asking for up to 180 extra days to pay your full balance avoids immediate penalties and shows good faith while you get a plan in place.
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Set up an installment agreement – The IRS will work with you to establish a monthly payment plan that fits your financial situation. This avoids harsh collection actions as long as you stick to the agreed schedule.
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Look into an Offer in Compromise – For serious hardship cases, you may qualify to settle tax debts for less than the full amount owed in some circumstances.
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Ask about penalty abatement – If your failure to pay on time was due to reasonable circumstances, you can request that late payment penalties be removed by the IRS.
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Get help from a tax professional – Enlisting an expert like a CPA, Enrolled Agent, or tax attorney can help navigate communication with the IRS and ensure you get on the optimal payment program.
Avoiding IRS Collection Actions
If you don’t pay your taxes on time, the IRS may resort to enforced collection actions including wage garnishments, bank levies, property liens, or asset seizures. Setting up a formal payment plan puts these aggressive measures on hold as long as you follow through on the agreed installment payments. However, interest and penalties continue racking up based on your unpaid balance.
Once you hit the 10 year statute of limitations, the IRS is obligated to cease collection activity on the old tax debt. At this point, they will remove the balance from their books. Keep in mind though that any payments reset the 10 year clock, so this is really a last resort option.
The IRS is required to notify taxpayers of their intent to levy assets or garnish wages at least 30 days in advance, giving you a chance to respond before they take action. Be sure to open any notices and call right away if you receive one. Acting quickly is key to halt enforced collections in their tracks.
Avoid Future Tax Troubles
The best way to avoid owing back taxes is ensuring you stay on top of your tax obligations year-round. Here are some tips:
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Carefully review your payroll withholding – Increase your W-4 allowances if needed to cover your expected tax burden for the year.
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Make quarterly estimated payments – For income like self-employment, freelancing, or investments, pay taxes quarterly to avoid a big bill.
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Set aside money throughout the year – Open a dedicated savings account and automatically contribute each month to build up a balance to pay your tax bill.
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File for an extension – If needed, get more time to file your return, but pay any anticipated taxes owed on time to avoid penalties.
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Address problems early – If you fall behind on payments, contact the IRS right away to discuss solutions.
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Work with a tax pro – Have an expert help ensure your taxes are done accurately and on time.
The Bottom Line
Dealing with unpaid back taxes can be stressful, but avoiding the issue will only make matters worse. The IRS provides reasonable timeframes like 120 days, 72 months, or sometimes longer to resolve tax debts for taxpayers who engage with them to set up payment plans. While interest and penalties continue to accumulate until the balance is paid off fully, these options are far better than facing aggressive collections or damage to your finances and credit. Being proactive, communicating with the IRS early, and enlisting tax help if needed are key to dealing with tax debts successfully.
Time to collect can be suspended or extended
Suspending and extending the collection period both delay the CSED.
Certain events can suspend or extend the 10-year CSED. When were prohibited by law from collecting tax, the CSED collection period is generally suspended, which means the time we can collect tax pauses.
In contrast, when were permitted by law to add time to the 10 years to collect, the CSED is extended, which means we can continue to collect tax.
Sample IRS account transcript: Transactions section
Note: This transcript is fictional. It complies with the law which requires us to keep taxpayers returns and return information confidential (IRC 6103).
Former IRS Agent Discloses What To Do If You Have Years Of Unfiled Back Tax Returns, NOT TO WORRY
FAQ
How long does the IRS allow you to pay back taxes?
Payment options include full payment, short-term payment plan (paying in 180 days or less) or a long-term payment plan (installment agreement) (paying monthly).
What is the deadline for paying taxes owed to the IRS?
When do you have to pay taxes? The deadline for paying taxes is midnight on April 15 in the time zone you’re in. If you file via mail, the IRS will consider your return filed on time if it was postmarked by the due date.
What is the 3 year rule for the IRS?
The IRS can usually assess tax, by law, within 3 years after your return was due, including extensions, or – if you filed late – within 3 years after we received your return, whichever is later. This time period is called the Assessment Statute Expiration Date (ASED).
What if I owe the IRS but can’t afford to pay?
They can apply for a payment plan at IRS.gov/paymentplan. These plans can be either short- or long-term. Short-term payment plan – The payment period is 180 days or less, and the total amount owed is less than $100,000 in combined tax, penalties and interest.