The IRS will place your account into a “hardship” status if you are unable to pay your back-tax bill. This resolution is called currently not-collectible and it is used by thousands of Americans that cannot pay their tax liability.
Whether you owe $1,000 or $1 million, if your financial statement shows that a hardship would be created if you were forced to pay the IRS, a currently not collectible resolution can be negotiated. The IRS looks at your overall reasonable collection potential based on your total monthly income and expenses, as well as your ability to borrow against personally owned assets. A currently not-collectible status is a great way to get your case out of collections, stop the threatening letters being delivered to your house, and give you breathing room to handle other areas of your life.
Much like an IRS Installment Agreement, if a currently not-collectible status is in place, penalties and interest will continue to accrue, and any tax refunds will be taken and applied to the balance owed. Tax liens will also be filed if they have not already.
How to Qualify for a Currently Not-Collectible Status
All delinquent tax returns must be filed and a level of financial destitution must be shown. A full financial analysis must be completed by your Power of Attorney and the Internal Revenue Service.
Once your account is in this resolution, the IRS may review your income on an annual basis to determine if any changes have occurred. If nothing has changed, your account may be placed back into this status. This can happen again and again until the Internal Revenue Service Collection Statute Expiration Dates have expired. If this is the case, the liability showing on record will be written off, and a zero account balance will be shown.
Call Timberline Tax Group at 844-345-3250 for a free consultation.