How To Get IRS Currently Not Collectible Status
When you owe back taxes, it can be difficult 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 standard living expenses. If the IRS believes that it would be close to impossible for you to pay off the debt in the near future, the account can be deemed currently not collectible, or be given uncollectible status.
If you have insufficient discretionary income according to federal tax rules and regulations for calculating discretionary income available to pay your tax debts, this status can be very fortunate. Getting the IRS to agree, however, can be tricky. Furthermore, it’s important to realize that this does not always mean that the debt won’t come back in the future.
How Do I Apply To Get Currently Not Collectible Or Uncollectible Status?
The first step towards getting this status is to disclose all of 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 standard living expenses, selling assets, or both.
Essentially, the IRS will make a determination on what can reasonably be paid in order to come up with the money to pay back taxes. It’s important to realize that case managers at the IRS tend to be extremely conservative when determining necessary expenses. Nearly always, the IRS applies caps to standard expenses based on your place of residence and family size. It’s important to note that these standards are the same for all taxpayers.
The IRS will look to see how much money is left after paying reasonable living expenses. If it is determined that there are no funds left with which 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 any 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 property that the taxpayer owes, ensuring that the debt will be paid when the property is sold. In fact, some accounts that have currently not collectible status are paid off entirely by these liens. Because of this, it is often advised that taxpayers who have currently no collectible status be very careful about their withholdings and be aware of when they sell property.
By law, the IRS has ten years to collect the debt. If your account remains uncollectible during this entire period, then 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 in conjunction 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 are able to reach the end of the ten year period without making additional payments to the IRS.
For taxpayers who truly cannot pay their tax debt, currently not collectible status can give them some needed breathing room. It is important to understand that this status does not erase the debt, however.
Samaritan Tax Relief 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 accurate and completely to accurate portray the minimum discretionary income.
When you hire Samaritan Tax Relief to assist you with your tax collection problems, we will guide you through the process while advocating on your behalf and protecting your interests.
Samaritan Tax Relief is here to help you because when you’re dealing an with IRS collections, the worst thing you can do is to do nothing at all? The best decision is to take the necessary first step and to try to obtain some tax debt relief!
Click on the “Get Help” button at the top of the page to take that first step.