Currently Not Collectible

Taxpayers that are struggling with financial hardship may be able to find a way to be completely relieved of their IRS debt. Currently Not Collectible Status removes the taxpayer’s tax balances from active collections with the IRS. 

A taxpayer provides documentation of their current financial condition, and if such documentation shows that the taxpayer cannot meet their basic obligations, let alone their tax liability, the IRS will declare a financial hardship. As the Statute of Limitations on a tax debt is 10 years, the individual must continually file their tax returns and provide any requested information to the IRS in a timely manner.

Anytime a taxpayer receives a raise or has their income to expense ratio change such that they are no longer in financial hardship, they may lose their Currently Not Collectible Status. At this point, a new payment plan may be drawn up to settle the balance with the IRS based on the new financial situation in which the taxpayer finds themselves. The Currently Non Collectible Status allows taxpayers some relief while they try to improve their financial condition.