This article is a resource included in our course, Dealing with IRS Tax Debt. It's a class designed to help individuals resolve their tax debts on their own, saving thousands of dollars in representation costs. This article will discuss the date taxes get formally assessed and the importance of knowing when that happens. I'll also share some information that will help obtain this information.
What is a Tax Assessment?
If you owe taxes to the IRS, it means that the IRS has formally recorded the tax you owe for a particular tax year. This formal recording is called Assessment. The IRS describes assessment as the “statutorily required recording of the tax liability.” The assessment date can vary widely depending on various factors such as audits, appeals, and tax court involvement. However, for most income tax filers, the assessment date occurs shortly (a few days or weeks) after the return is filed and accepted by the IRS.
Internally, the IRS calls the assessment date the “C23 date” because the assessment date got recorded on a form called a C23. Today, the date gets logged electronically, but the C23 title remains.
Why the Assessment Date is Important: The assessment date is significant because it signals the date the IRS officially records your tax liability. IRS collection efforts cannot start until this happens. More importantly – from a collection perspective - the assessment date signals the date the Collections Statute of Limitations begins ticking down. The Collection Statute of Limitations defines the IRS's time to collect a tax debt. This statute is critical to dealing with any IRS tax debt. The IRS generally has ten years to collect taxes after the assessment date. But this ten-year statute gets extended by factors such as appealing a tax due or filing an Offer in Compromise.
The taxes you owe for a particular year can have multiple assessment dates. Amended returns and audits, for example, will have new assessment dates when they create extra tax. These new assessments are only for the increased amount of tax. Some penalties also have separate assessment dates. These penalties include the Estimated Tax Penalty and a variety of civil penalties such as fraud and negligence.
Internally, the IRS calls the day the Collection Statute expires the Collection Statute Expiration Date (CSED). IRS employees are mindful of this date when working with taxpayers (as you should be). Once the date passes, the IRS can no longer collect taxes or penalties that share the same date.
How to Obtain Your Tax Assessment Date: There are several ways to find your tax assessment date. The first is to contact the IRS and request a report called the Tax Account Transcript for that year. The Account Transcript lists the type of return filed for a particular year. It also reports your filing status, adjusted gross income, taxable income, and payments made on the tax due. The Tax Account Transcript also notes the date the IRS assessed the tax (what you are looking for), penalties, as well as audits and changes made to the return.
This report is generally available for ten years. However, if you order by phone or through the IRS Get Transcript tool, you might only be able to obtain the previous three-to-four years. If you need other years, use IRS E-Services or Form 4506-T, Request of Transcript of Tax Return.
The second way to obtain your assessment date(s) is another report called the Record of Account Transcript. It is similar to the Tax Account Transcript, except it includes a line-by-line summary of income, deductions, credits, and taxes. The Record of Account Transcript is generally available for the current year and the previous three.
Transcript Codes for Assessed Tax: When you receive either transcript, the Tax Account Transcript, or the Record of Account Transcript, there are two three-digit codes you need to know. These codes are called Transactions Codes. Code 150 signifies the assessment date for an initially filed return. If additional tax is assessed – due to an audit or error - the code number 290 is used. There are quite a few other codes that may appear on the transcript. These codes are a resource included in our Dealing with IRS Tax Debt course.
Transcript Limitations: Please note that, although assessment dates provide a method to estimate the end of the collection window, they do not give the Collection Statute Expiration Date (CSED). As mentioned earlier, many factors influence the expiration date of the collection period. These factors include appeals, Offers in Compromise, Installment Requests, or Taxpayer Advocate engagement. The CSED is information the IRS likes to keep close to the vest and may refuse to provide. The date gets tracked on an internal document called a TXMODA. If they deny your request, filing a Freedom of Information Act (FOIA) request may be required.
The Bottom Line: Knowing the assessment date of taxes you owe is key to effectively Dealing with Your IRS Tax Debt. Please review the course if you owe tax. It is the product of 20+ years of helping clients manage their tax obligations. This experience taught me that most clients could handle their debt independently with a bit of instruction, saving thousands of dollars in representation fees. You owe it to yourself to check it out!
All courses and articles are for informational purposes only and do not constitute tax advice. Taxes are complicated - do not act on course information without consulting a professional. Always refer to treasury regulation before making any tax decision. Read the full disclaimer.
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The course was excruciatingly detailed, which I appreciate. I definitely recommend this course to anyone who even thinks they may need it.- Greg, Brookfield, IL, 1099-MISC Basics Course