If You Owe Back Taxes and Don't Have the Ability to Pay, the IRS Can Declare You "Currently Not Collectible"

If you do not have the means to pay the taxes owed, have little assets that the IRS can levy, no income above the minimum need to cover necessary living expense, you would most likely be able to be considered "uncollectible" to the IRS. Being considered "uncollectible" to the IRS means that they can temporarily pause collections against you under the IRS hardship rule.

If you qualify for this, you still owe the IRS money 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. This review happens normally once a year. You will be required to send an updated financial statement every year for them the IRS to review. These statements must be accurate because they will compare it to filed tax returns to make sure everything matches.

One important thing to note about being considered 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, they can no longer collect on these amounts. Many people have been declared uncollectible for a period of many years and have ended up owing no tax once that statute of limitations has expired.

How to Receive a "Uncollectible" Status From the IRS

In order to receive and uncollectible status from the IRS you must be able to prove that you do not have any assets that would allow you to pay the tax amounts owed. So in essence, you must show you only have enough money to pay for the basic necessities of life. To do this, you must fill out IRS Form 433-F. This is the form used to show all your assets, this is required with most IRS filings because it will give them a sense of the assets you own that they can liquidate in order to fulfil your tax liability. However, the purpose of doing this when filling it out to receive an uncollectible status 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.

Tax Professional With Currently Not Collectible
Tax Professionals can be the best option for many people when dealing with a lot of money and complex tax problems.

Prove Financial Hardship
If you cannot pay back taxes, it is likely you may be able to have your account placed in a "Hardship" or "Currently not Collectible" status.

IRS Statue of Limitations
If you cannot pay your back taxes, the IRS Statue of Limitations you can use your to your advantage in order to avoid paying taxes.

Options When You Cannot Back Taxes or Taxes On Time
There are many different options and solutions you can pursue if you cannot pay back taxes owed.

Delay IRS Collections
If you just need more time to pay and want to delay the IRS collection system you can easily get extensions.