Every IRS collection case has an expiration date. The IRS calls it the Collection Statute Expiration Date, or CSED. After it, the IRS cannot levy. Some clients hope to simply wait it out.
Sometimes that is a real strategy. Often it is not, because the clock can stop, and because a bank levy served right before the deadline still counts. Here is how the statute interacts with bank levies.
The basic rule: 10 years from assessment
IRC § 6502(a) says that where a tax was timely assessed, it may be collected by levy or a court proceeding only if the levy is made or the proceeding begun within 10 years after the assessment. There are two narrow extensions in the statute:
- With an installment agreement, a period agreed to in writing when the agreement was entered into, plus 90 days (§ 6502(a)(2)(A)).
- With a levy release after the 10 years, a period agreed to in writing before the release (§ 6502(a)(2)(B)).
Each assessment has its own clock. A tax year can have several assessments (the original return, an audit adjustment, penalties), each with its own 10 years.
The bank levy timing rule
A bank levy is "made" when it is served on the bank, not when the bank pays. That matters because of the 21-day hold.
IRM 5.11.2.3.1.2 gives the exact scenario: a notice of levy is served on the taxpayer's bank one week before the collection period runs out. The bank does not have to send the money until the 21-day hold expires, which is after the deadline. The IRM's conclusion: "This levy does not have to be released when the collection period runs out, because it was served timely."
The regulation agrees. Treas. Reg. § 301.6343-1(b)(1)(i) says a levy made within the period "does not become unenforceable simply because the person who receives the levy does not surrender the subject property within the period of limitations."
Translation: if you are counting down to a CSED, the final weeks are when a levy is most likely, not least.
Levies after the deadline must be released
The flip side is strong. Under IRC § 6343(a)(1)(A), a levy must be released when the liability has become unenforceable by lapse of time. The regulation says a levy made outside the period, normally ten years without suspensions, must be released unless you agreed in writing to extend the period or a court proceeding to collect was begun in time (Treas. Reg. § 301.6343-1(b)(1)(i)).
The IRM also says a levy issued after the statutory collection period has expired must be released (IRM 5.11.2.3.1.2), and treats levies in violation of the law as ones whose proceeds must be returned, subject to the time limits (IRM 5.11.2.4.1). See getting levied funds returned.
Wages work differently: a continuing wage levy must be released at the end of the collection period (Treas. Reg. § 301.6343-1(b)(1)(ii)). See bank levy vs. wage levy.
What stops the clock
The 10 years are not always 10 calendar years. Common suspensions:
| Event | Suspension | Authority |
|---|---|---|
| Timely CDP hearing request | While the hearing and appeals are pending; cannot expire before 90 days after final determination | § 6330(e)(1) |
| Pending offer in compromise | While levy is barred, including 30 days after rejection and during appeal | § 6331(k)(1), (k)(3); § 6331(i)(5) |
| Pending installment agreement request | While levy is barred, but not while an agreement is in effect | § 6331(k)(2), (k)(3) |
| Bankruptcy | While collection is prohibited, plus 6 months | § 6503(h) |
| Absence from the U.S. | While outside the U.S. for a continuous 6 months or more | § 6503(c) |
| Assets in court custody | While in custody, plus 6 months | § 6503(b) |
| Wrongful levy on a third party's property | From receipt to return or final judgment, plus 30 days, as to that amount | § 6503(f) |
| Taxpayer Assistance Order application | From application to decision, and any period in the order | § 7811(d) |
Notice the tension. Many of the tools that stop a bank levy (CDP, offers, pending payment plans) also stop the CSED clock. That is not a reason to avoid them. It is a reason to know the cost.
Figuring out your CSED
To figure out your CSED, start with your IRS account transcripts: the assessment dates, plus 10 years, plus every suspension. The IRS's own calculation can be wrong, especially after bankruptcies, offers, and CDP hearings. If a levy arrives close to what you believe is the deadline, check:
- The assessment date for each period on the levy.
- Every suspending event and its start and end dates.
- The date the levy was served on the bank.
If the levy was served after the CSED for a period, that period's portion must come off. If the IRS levied after the CSED for every period, the whole levy must be released.
Be careful what you sign
The statute itself contemplates two written extensions tied to collection events: a period agreed in writing when an installment agreement is entered into (§ 6502(a)(2)(A)) and a period agreed in writing before a levy release after the 10 years (§ 6502(a)(2)(B)).
The levy release regulation points the same way. Among the conditions that the IRS may treat as facilitating collection, and therefore supporting a levy release, Treas. Reg. § 301.6343-1(b)(2)(ii)(D) lists the taxpayer executing an agreement to extend the statute of limitations under § 6502(a)(2). In other words, a request to sign an extension can show up as part of a deal to release a levy.
Sometimes that trade is worth it. Sometimes it is not. Before you sign anything that extends the collection period, know your current CSED for each tax period and what the extension costs you in years of exposure to future levies.
Is waiting out the statute a strategy?
Sometimes, for taxpayers with little income and few assets near the end of the period. But the IRS knows the dates too. Waiting does not stop bank levies; it often invites them. And collection alternatives that might otherwise make sense can extend the clock.
When the numbers support it, a hardship (currently not collectible) closing can be an honest way to let time pass without levies. The IRM says open levies should be released when a case is closed as hardship (IRM 5.11.2.3.1.4). See economic hardship release.
The collection statute is a real deadline. But the IRS does not spend the final weeks waiting politely. Plan for the last year, not just the last day.
For a deeper look at how the 10-year period is computed, see the firm's guide on the IRS collection statute of limitations.