When dealing with the IRS, Taxpayer’s who come into our Richardson, TX tax office, often run into IRS jargon that makes no sense to them. They also run into these acronyms when reading and/or listening to our blogs and videos as well as others. Today, we’re going to cover three common acronyms used when dealing with IRS Debt and what each means. These are the CSED, ASED, and RSED.
CSED – Collection Statute Expiration Date
Did you know that the IRS legally has 10 years from the date of the assessment of the tax liability to collect the tax for that tax year. The tax assessment is by year and each year assessed has a CSED.
While the CSED is 10 years from the date that the IRS assessed the tax, in certain situations that clock can be stopped and the CSED extended. The CSED is typically suspended when the IRS is not permitted to pursue collection against the Taxpayer and includes the following actions by the Taxpayer:
- The Request of a Collection Due Process (CDP) hearing
- Pending Request of an Offer-In-Compromise
- Pending Request of an Installment Agreement
- Request of Innocent Spouse Relief
- Filing for Bankruptcy
ASED – Assessment Statute Expiration Date
The ASED is the amount of time that the IRS has to close an audit and take action to collect additional tax, penalties and interest after a return is filed. The normal ASED is three years from the date of filing a tax return so the good news, except in extenuating circumstances such as fraud or substantial omissions of income, the IRS does not have an unlimited amount of time to audit your tax return.
As example is that if a tax return was filed on 04/15/2019, the ASED is 04/15/2022. Although this may sound like a fairly long period of time, an audit typically takes several months to complete. Generally, most audit are started within 24 months after a tax return is filed.
RSED – Refund Statute of Limitations
Since the IRS has 10 years to collect tax debt, you may think that a taxpayer has up to 10 years to get a refund but that wouldn’t be so. Generally, the RSED for taxpayers is 3 years from the date the return was filed or due to be filed, or two years from the date the Taxpayer paid the taxes due, whichever is later. If you miss those deadlines, the IRS will not keep any refunds due on the return.
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