Currently Not Collectible

How To Get IRS Currently Not Collectible Status

When you owe back taxes, it can be challenging to get the debt paid off. Depending on your situation, it might be possible that the amount owed is simple too large to expect a person to pay it off in a reasonable amount of time, based on everyday living expenses. If the IRS believes that it would be close to impossible for you to pay off the debt shortly, the account can be deemed currently not collectible or be given uncollectible status.

This status can be very fortunate if you have insufficient discretionary income according to federal tax rules and regulations for calculating discretionary income available to pay your tax debts. Getting the IRS to agree, however, can be tricky. Furthermore, it’s essential to realize that this does not always mean that the debt won’t return in the future.

How Do I Apply To Get Currently Not Collectible Or Uncollectible Status?

The first step toward getting this status is to disclose your assets, liabilities, income, and expenses to the IRS. Case managers are looking to see if there is a way that you could pay the money you owe. These funds can come from discretionary income left over after paying your everyday living expenses, selling assets, or both.

Essentially, the IRS will determine what can reasonably be paid to come up with the money to pay back taxes. It’s important to realize that case managers at the IRS tend to be highly conservative when determining necessary expenses. Nearly always, the IRS applies caps to standard costs based on your residence and family size. It’s important to note that these standards are the same for all taxpayers.

The IRS will see how much money remains after paying reasonable living expenses. If it is determined that there are no funds left to pay the IRS, the account will be placed in currently not collectible status.

What Happens After I Get Currently Not Collectible Status?

Once the IRS has labeled your account currently not collectible, all collection efforts cease. This includes levies on your wages, Social Security checks, or other income.

Currently not collectible status does not, however, include levies against future tax refunds. It’s also possible for the federal government to place a lien on the property the taxpayer owes. This ensures that the debt will be paid when the property is sold. Some accounts that have currently not collectible status are paid off entirely by these liens. Because of this, it is often advised that taxpayers with currently not collectible status be cautious about their withholdings. And be aware of when they sell the property.

By law, the IRS has ten years to collect the debt. If your account remains uncollectible during this period, the IRS cannot collect on it after the time limit runs out.

Every year, the IRS is supposed to review the tax filings of taxpayers with currently not collectible status and determine if their financial situation has improved to the point that they can pay their tax debt. These reviews occur with adjustments in the standards used to determine a reasonable cost of living. Therefore, many people who do not see a significant increase in their income can reach the end of the ten years without making additional payments to the IRS.

For taxpayers who cannot pay their tax debt, currently not collectible status can give them some needed breathing room. However, it is essential to understand that this status does not erase the debt.  

Peace Of Mind Tax Help Tax Resolution Representation

One of your most important rights as a taxpayer is your right to have a qualified tax resolution professional, such as an Enrolled Agent (EA), represent you in front of the IRS and/or States and provide tax resolution for your tax collections and currently not collectible status request to ensure that it is done accurately and completely to portray the minimum discretionary income accurately.

When you hire Peace Of Mind Tax Help to assist you with your tax collection problems, we will guide you through the process while advocating on your behalf and protecting your interests.

Peace Of Mind Tax Help is here to help you because when you’re dealing with IRS collections, the worst thing you can do is do nothing at all. The best decision is to take the necessary first step and obtain some tax debt relief!

Click on the “Get Peace Of Mind” button at the top of the page to take that first step.