Internal Revenue Service guidelines provide that in certain circumstance it is appropriate to place a taxpayer’s account into Currently Not Collectible Status. Such as if the IRS is unable to locate the taxpayer, or if the taxpayer dies and there exists no collection potential from the estate, also, if the taxpayer is a business and is able to stay current with its tax obligations, but has no ability to pay against the back taxes. Finally, the IRS Policy Manual states that if the collection of the liability would create undo economic hardship, then the account should be placed into currently not collectible status. In order to place the account into “currently not collectible” status, the IRS will need to verify the taxpayer’s assets and liabilities as well as income and expenses. After the IRS receives evidence that the taxpayer has no ability to pay the account, will the account then be placed into currently not collectible status. This evidence is usually obtained from the taxpayer on the Collection Information Statement, IRS Form 433A. Once the IRS receives this form and the backup documentation, the taxpayer’s account will be coded “currently not collectible”. At this time the IRS must then stop all collection activities including levies and wage garnishments.
If you or someone you know has found themselves In the situation of needing to request currently not collectible status to get relief from aggressive tax collection actions, then it is important to contact a qualified tax professional that specializes in tax resolution to make sure that your case is handled properly, and all of your resolution options and taxpayer rights are explained to you in full detail.
Filling out IRS Form 433A – Your First Step to Solving Your Tax Problem
As mentioned above, IRS Form 433A, known as the collection information statement, needs to be filled out entirely. It is essential that all backup documentation be provided, including bank statements, wage statements, loan statements, business income and expenses and household expenses. Once all of the information is obtained the tax professional will then review it and present the information on the form 433A to your maximum when negotiating with the IRS.
Although form 433A is the only form that needs to be filled out in order to be considered for “currently not collectible” status by the IRS, failure to accurately and correctly detail all of the requested information including account numbers could result in denial and/or payment arrangements that are not affordable to the taxpayer. Thus, it is highly recommended that the taxpayer considering hiring a qualified tax professional when attempting to get their account placed into “currently not collectible” status. A qualified tax professional that has experience dealing with the IRS can help them step-by step through the process.
You have been Granted “Currently Not Collectible” Status, Now What?
Once you have been approved for the status by the IRS, it is important to remember that your tax debt is not going to be washed away. This status only gives you a reprieve from enforced collection activities such as; wage garnishments, bank levies and asset seizures. During this time, the ten (10) year collection statute of limitations will continue to run. If you cannot pay all of your tax debt back to the IRS within that time frame then the tax debts will expire.