CURRENTLY not COLLECTIBLE
What Does It Mean to be Placed in Uncollectible Status?
The correct term is Currently not Collectible. This means that at the present moment, you do not have the ability to pay the IRS anything toward your tax liability.
Can't Pay the IRS for Tax Liability -- The IRS May Declare You Currently not Collectible
If you do not have the means to pay your tax liability, have little assets that can be immediately sold or that the IRS can levy, no income above the minimum need to cover what is called "allowable expenses", you would most likely be able to be considered "uncollectible" to the IRS. Being considered Currently not Collectible (uncollectible) to the IRS means that the IRS can temporarily pause collection activity against you for your tax debt under the IRS hardship rule. A temporary pause is usually 18 to 24 months.
How Do You Become Currently not Collectible
If you qualify to be declared Currently not Collectibe (Uncollectible), you will still owe the IRS for your tax liability and interest will continue to accrue. However, all collection activities must be temporarily suspended against you. The IRS will then continue to monitor your financial situation to see if it improves to a point where they can demand payment for your tax debt. This review happens normally every 18 to 24 months. You will be required to send an updated financial statement ( a 433 Form) periodically for them to review. These statements must be accurate because the IRS will compare it to filed tax returns to make sure everything matches.
Advantage to being Currently not Collectible (Uncollectible)
One important thing to note about being considered Currently not Collectible (a/k/a currently uncollectible) is that the Statute of Limitations is still running for those back taxes owed. The Statute of Limitations lasts 10 years on IRS taxes due, if they are not collected in this period, the IRS can no longer collect on these amounts (with some exceptions). Many people have been declared uncollectible (declared Currently not Collectible) for a period of many years and have ended up owing no tax once that statute of limitations has expired.
Are You on Social Security / Disability and Have Limited or No Assets
If you are on a fixed income, Social Security or Disability and have limited or no assets, you may be declared Currently not Collectible (Uncollectible).
In order to be declared Currently not Collectible (uncollectible) by the IRS, you must be able to prove that you do not have any assets that would allow you to pay your tax liability. Therefore,, you must show you only have enough money to pay for your basic living necessities. To do this, you must fill out an IRS Form 433-F. This is the form used to show all your assets, and is required with most IRS filings. The 433-F Form will give the IRS a sense of your assets that they could liquidate to satisfy your tax liability. However, the purpose of doing this when filling the 433-F is to show that you do not have any assets of value that they can liquidate and it would not be worth their time and effort to collect from you.
Can You Become Currently not Collectible on Your Own
Yes you can. However, the IRS is not going to help you. The IRS does not exist to be helpful. The job of the IRS is to collect money. It is the responsibility of the taxpayer to complete the documents correctly and to submit them correctly, timely and completely.
The formula for declaring anyone Currently not Collectible is complicated. The same is true for the Offer in Compromise program.
YOU NEED TO KNOW WHAT YOU ARE DOING
|IRS Tax relief Help|
Should you make an error of any kind, the IRS will disallow your petition and continue to do what they do best, collect money and enforce payment of your tax debt.
What Happens to my IRS Tax Liability
Your tax debt with the IRS will continue to accrue interest and will add to the amount owed. So at the end of the Currently not Collectible (Uncollectible) period you, the taxpayer, will owe more than you did when originally classified as uncollectible.
STATUTE OF LIMITATIONS
Will the IRS file a Tax Lien
Probably yes. Until the Statute of Limitations runs out, the IRS will continue to attempt to keep their tax debt alive. One way of doing that is to file a Tax Lien. This could affect aspects of your credit.
What Happens During This Currently not Collectible Time Frame
At the end of the initial Currently not Collectible (Uncollectible) period, IRS will want to re-evaluate your financial position. Once again, you will need to submit a new 433-F Form. If your new figures show that you have positive cash flow and can afford to make monthly payments, then IRS will set you up on a monthly Installment Agreement. If not much has changed and your monthly expenses are equal to or greater than your monthly income, then IRS will tell you that you are still deemed Currently not Collectible (Uncollectible) and you will not be required to make any payments toward your tax liability.
THE STATUTE OF LIMITATIONS
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