You may be eligible for “currently not collectible” status if you can show that there is absolutely no way that you can currently pay your tax debt, either through wages you earn or by levying any assets.
Although no one wants to be in a financial situation that warrants a “currently not collectible” status, if you are not in a position to pay your tax debt due to inadequate income or assets, then this may be an avenue of tax negotiation worth exploring.
In order for your outstanding tax obligations to be deemed “currently not collectible”, you need to meet the following criteria:
- Your wages are insufficient to cover anything more than what is deemed to be “necessary living expenses”, so there is no additional income that the IRS can garnish from your wages.
- You do not own assets that can be seized by the IRS to cover your tax obligations. If you have less than a 20% equity stake in an asset, the IRS cannot seize the asset. Even if you have more than the minimum 20% equity stake, the IRS will not seize an asset if they determine that the expenses involved in seizing and selling the asset are greater than the equity they will recoup from the process.
During the time that your account is deemed to be “currently not collectible”, collection attempts will cease by the IRS but penalties and interest will continue to accrue. This status is only considered to be temporary and will be reviewed annually to determine if and when your financial situation improves enough that another form of tax resolution is possible. You will have to provide financial statements each year to verify your status.
If your financial situation improves, the IRS will resume its collection efforts to recoup your tax obligations. Once this occurs, you may be able to use another form of tax negotiation to resolve your situation.
There is a 10 year statute of limitations for collecting back taxes. If this statute of limitations expires while you are still deemed to be in “currently not collectible” status, your tax obligations for the period covered by the statute of limitations will be considered to be permanently not collectible and you will no longer be required to repay any portion of the tax debt.
Think You Might Be Eligible For “Currently Not Collectible” Status? Contact Us Today!
Call People’s Tax Relief for a free, no-obligation tax consultation at 866-788-8069 or fill out the form on the side of this page and one of our experienced tax negotiation specialists will contact you. During this consultation, we will analyze your financial situation in order to determine whether you may be able to pursue “currently not collectible” status to cease tax collection efforts against you.