Currently Not Collectible is a status, generally lasting one to two years, that the Internal Revenue Service (IRS) assigns to taxpayers who are facing financial hardship and are unable to pay their tax liabilities currently. Our team has extensive experience working with Appeals Officers, Revenue Officers, and Collection Agents and can assist in obtaining Currently Not Collectible status, through which the IRS temporarily suspends its collection efforts, including garnishments, levies, and other collection actions. The Currently Not Collectible status can also assist in reaching the end of the statute of limitations for the IRS to collect (10 years) or filing an Offer in Compromise.

Key points to understand about Currently Not Collectible status include:

1. Financial Hardship: To qualify for Currently Not Collectible status, a taxpayer must demonstrate a significant financial hardship that prevents them from paying their tax debt. This hardship could result from factors such as unemployment, serious medical issues, or other circumstances that affect the taxpayer’s ability to earn income.
2. Temporary Relief: Currently Not Collectible status provides temporary relief from collection activities. While the taxpayer is in this status, the IRS generally does not actively pursue collection efforts, such as seizing assets or bank accounts. This status is mostly sought where there is simply no way the IRS will settle for less because the taxpayer has too much in assets which are not currently liquid.
3. Review of Financial Situation: The IRS reviews the taxpayer’s financial situation to determine whether they qualify for Currently Not Collectible status. This review may involve providing detailed financial information, such as income, expenses, assets, and liabilities.
4. Ability to Pay: The IRS assesses the taxpayer’s ability to pay based on their current financial circumstances. If the taxpayer’s income and assets fall below a certain threshold, then the IRS may classify the account as Not Collectible.

It is important to emphasize that Currently Not Collectible status does not eliminate the tax debt itself; it simply provides temporary relief from collection activities. Taxpayers should explore long-term options for resolving their tax debt, such as negotiating a payment plan, settling the debt for a reduced amount through an Offer in Compromise, or seeking other appropriate solutions once their financial situation improves.