february2021 - 21

FEATURE
the information contained on the Tax Return
Transcript and Tax Account Transcript onto one
report. This transcript is available for the current
year and three years prior.
* Wage and Income Transcript: Provides information
from all Forms W-2, 1099, 1098, Schedule K-1, and
Form 5498, IRA Contribution Information, submitted
to the IRS for the tax year. This transcript is generally
available after July for the current tax year and for
ten years prior.
* Verification of Non-filing Letter: Beneficial if there
is any question whether the IRS has a record of
Form 1040, 1040A, or 1040-EZ being filed. This letter
does not indicate whether the taxpayer had a filing
requirement and is generally available beginning
after June 15 for the current tax year and three tax
years prior. Taxpayers who need this letter for earlier
tax years may submit Form 4506-T.
The transcript Transaction Code (TC) for assessment on the original return is 150. When additional
tax is assessed on an account, the TC is 290. (Keep in
mind that there are several other assessment codes,
depending on the type of assessment.) Only two of
the above transcripts, Tax Account Transcript and
Record of Account Transcript, report the assessment
date.
None of the above transcripts provide the
CSED. Unless all of the activities that have transpired on a taxpayer's account can be discerned, it
will be very challenging to calculate the CSED based
on the assessment date alone. This is because the
collection statute of limitations may be suspended
or extended due to various taxpayer actions, such
as filing for bankruptcy, requesting an installment
agreement, requesting a timely Collection Due
Process Hearing, filing an Offer in Compromise or
Innocent Spouse request, living outside of the United
States for at least six months, during the time the
Taxpayer Advocate Service steps in to intercede, and
qualified military deferment. The IRS is prohibited
from continuing collection enforcement actions
while these actions are in progress.
There is an IRS internal transcript that provides
the CSED called a TXMODA. Tax professionals may
request this internal transcript by contacting the
IRS Practitioner Priority Service telephone hotline.
The IRS can refuse to provide this transcript. If
the request is denied, the taxpayer may submit a
Freedom of Information Act (FOIA) to request the
transcript. Once the TXMODA is received, IRS Document 6209 will be needed to discern the meaning
of the transcript's codes.
The IRS does not provide a worksheet on how

they calculate the CSED. This is unfortunate as
it is not uncommon for the IRS to miscalculate
the CSED. Over the years, the Treasury Inspector
General for Tax Administration (TIGTA) and the
National Taxpayer Advocate have issued reports
and blogs that discuss the serious CSED calculation errors that have been found when reviewing
sample taxpayer accounts. Over seven years ago, in
2013, TIGTA reported that 39% of the seventy-five
sample accounts they reviewed had significant CSED
calculation errors.[1] In a blog posted on September
7, 2018, the National Taxpayer Advocate discussed
the IRS's systemic problems when calculating the
correct CSED and warned tax professionals to be
wary of the situation and advocate for the correct
CSED for their client.[2]
One of the most popular payment methods used
to pay down taxpayers' tax debt is an Installment
Agreement. Ironically, when it comes to accurately
calculating the correct CSED on accounts where an
Installment Agreement has been requested, the IRS
is falling short. According to the aforementioned
blog by the National Taxpayer Advocate, Nina Olson,
there are errors in the system that cause the CSED
to toll for an inordinate amount of time in certain
case types involving installment agreements.
The errors are found on accounts where a
taxpayer's installment agreement was approved,
rejected, appealed, terminated, and reactivated.
What appears to be occurring is the IRS will enter
in the system that an installment agreement
is pending but will not follow-up and enter the
resolution in the system, whether that resolution
is an approved installment agreement, rejected
proposal, or terminated agreement. This critical
error is causing taxpayers to be billed for expired
liabilities, which are causing an undue financial
burden on unsuspecting taxpayers.
Given the CSED inaccuracies on taxpayer
accounts, taxpayers have submitted payments to
the IRS after the CSED expired. Any payment that
is submitted after the CSED has expired is referred
to as an overpayment.[3] The IRS is not to solicit
payments once the CSED has expired. They are also
not required to give notice to the taxpayer when the
CSED has expired. A taxpayer will need to contact
the IRS by phone and ask if the CSED has expired
or request a Tax Account Transcript. The transcript
will show a TC code of 608, Write-off of balance due,
when the CSED has expired.
When a taxpayer submits a payment for a
liability whose CSED has already expired and the
taxpayer does not have any other outstanding liabili-

ties, the IRS must attempt to contact the taxpayer
and ask if they still want the payment applied or
returned to them. If the IRS is unsuccessful in
contacting the taxpayer, then the payment should
be returned to the taxpayer.
However, if a taxpayer does have other balances due, and the taxpayer submits a claim for
refund by filing Form 843, Claim for Refund and
Request for Abatement, the IRS will first use the
payment to offset any other tax liabilities owed by
the taxpayer and refund the remaining amount.
Generally, taxpayers have three years from when
a return is filed or two years from the time the tax
was paid, whichever is later, to claim a refund or
credit on a payment.[4] If the taxpayer did not file
a return but made a payment, the taxpayer must
request a claim for a refund within two years of
making the payment.
The date of assessment and collection statute
expiration date are two integral components of
the tax collection representation process. It is vital
for tax professionals to know how to obtain these
dates and keep watch for CSED date inaccuracies
on a client's IRS account. Through determining the
CSED, we, as tax practitioners, can provide the best
representation advice and remedy for our client, and
most of all, do no unintentional harm. ■
[1] " Recalculations of the Collection Statute Expiration Date
Were Not Always Accurate, " TIGTA Office of Audit, September
16, 2013, https://www.treasury.gov/tigta/auditreports/2013repo
rts/201330098_oa_highlights.html
[2] Nina E. Olson, " NTA Blog: " As a Result of TAS Advocacy, the IRS
is Working to Address a Computer Glitch That Allowed Collection
Activity on Accounts Expired Collection Statute Expiration Dates but
Many Issues Remain Unresolved, " Taxpayer Advocate Service Tax
News, September 7, 2018, https://medium.com/@YourVoiceAtIRS/
nta-blog-as-a-result-of-tas-advocacy-the-irs-is-working-to-addressa-computer-glitch-that-allowed-7ad4df2b7660
[3] IRC §6401(a)
[4] IRC §6511(a)

Arnold van Dyk is a licensed California attorney and currently serves as the Director of Tax Services at TaxAudit,
the largest tax representation service in
the country offering both audit representation and tax debt relief services. In
this role, he oversees more than 150 tax
professionals, and assists taxpayers with
IRS representation and assesses the complexities of the tax law and regulations
to determine the best strategies for audit
and tax debt resolutions. Arnold also operates his own law practice, Law Offices of
Arnold van Dyk, focusing on tax and estate planning.

FEBRUARY 2021 ■

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https://www.treasury.gov/tigta/auditreports/2013reports/201330098_oa_highlights.html https://www.treasury.gov/tigta/auditreports/2013reports/201330098_oa_highlights.html https://medium.com/@YourVoiceAtIRS/nta-blog-as-a-result-of-tas-advocacy-the-irs-is-working-to-address-a-computer-glitch-that-allowed-7ad4df2b7660 https://medium.com/@YourVoiceAtIRS/nta-blog-as-a-result-of-tas-advocacy-the-irs-is-working-to-address-a-computer-glitch-that-allowed-7ad4df2b7660 http://www.CPAPracticeAdvisor.com

february2021

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