The IRS can and will collect taxes, often taking aggressive collection actions. The IRS is legally entitled to seek payment for up to a period of ten years after an assessment is made. This period can be extended another ten years in some circumstances. However, it may be that you absolutely cannot come up with the required payments.
In order to assess your ability to pay, the IRS will evaluate your assets and income in order to determine your “reasonable collection potential.” This analysis can show that there is no reasonable collection potential. In that case, the IRS will generally put the collection account on hold, which is referred to as currently not collectible status.
Currently not collectible can be a very favorable remedy given that the IRS has a limited number of years to collect the tax debt. In some cases, the taxpayer may be able to keep this status until the unpaid tax debt simply expires, which means that the tax debt will be entirely wiped out.
If you are in a low-income bracket and are completely unable to pay your tax debts, currently not collectible may be an option for you to be relieved entirely of making payments. This may also apply if you are self-employed and your after-expense income is minimal or making payments would result in a financial hardship for you or your employees.
While every situation is different, here are some scenarios which may allow you to qualify for this solution:
Currently not collectible status can also be used in conjunction with other solutions. For instance, if you have tried a few alternative solutions for lowering your debt amount but are still unable to pay, this may be the next-best alternative.
This particular status was originally developed as a temporary measure in the case of hardship. It does not typically equate to complete forgiveness of the debt–it is merely a temporary hold on the IRS’s collection efforts. Please note that interest will continue to accrue.
The good news is that this status is often held for many years. When you submit your next year’s tax return, there is some chance that the IRS will re-evaluate whether you are capable of making payments. If the IRS believes that you are now ready to make payments, it might request more information from you or even remove your currently not collectible status.
We will help you to gather all of the information necessary to request that your account be placed on currently not collectible status. To do so, you have all the documents at the ready and be ready to argue and negotiate your case.
We will start by helping gather and assembling proof of your income and assets, including bank statements, income statements, payment for your major bills, and a list of expenses. This will help us to determine your allowable monthly expenses and whether or not the IRS will find that this is an agreeable amount to qualify for this rule of exception.
Your allowable expenses include food, clothing, household, health care, utility and transportation expenses. Don’t worry if you do not have this information on hand. Again, we will help you assemble and identify the information needed. This alone can save you a significant amount of time, energy and stress.
We advise clients on IRS collections matters such as currently not collectible status daily. Please contact us immediately if you have an unpaid tax debt and would like advice on whether currently not collectible status may be appropriate remedy.
Do you need help figuring out whether you can qualify for currently not collectible status? We are former IRS attorneys, appeals officers, and auditors who offer compassionate, individualized service at affordable rates.
If you are in a situation where you cannot pay your debt owing, call today for a confidential consultation. Our number is 713-909-4906.