What does it mean for your IRS account to be placed in uncollectible status?
The IRS will place your account in currently not collectible status if it determines that you cannot afford to make a payment.
If you are declared IRS Currently Not Collectible:
- The IRS may keep any tax refunds owed you and apply them to your debt
- The IRS will stop all collection actions against you; they should not levy your assets or income;
- Interest and penalties continue to accrue on the federal tax debt;
- The IRS may file a Notice of Federal Tax Lien even while you are uncollectible, and this can affect your credit rating as well as your ability to sell assets;
- The IRS may also review your financial situation periodically to determine if you still qualify.
Status 53 isn’t a permanent solution to a tax problem, but it can buy you time—and because of the IRS Statute of Limitations on collections, time alone can be used strategically.
Why the IRS Statute of Limitations and Your Liability Expiry Date Matter
One of the first things we consider when seeking IRS uncollectible status for a client is the expiry date of their tax debt.
By law, the IRS has 10 years to collect back taxes from the date you filed your tax return (or the date they filed on your behalf). That’s why proving economic hardship can be an effective strategy if you have an IRS balance that is close to the 10-year expiry. For clients who qualify, Currently Not Collectible status can be put in place to avoid disruptive IRS collection actions until the statute of limitations takes effect.
You may be a good candidate for Status 53 if you have no equity in assets and less than $25 in disposable income per month after IRS allowable monthly expenses. If your income is less than the allowable expenses, you will usually qualify for hardship status.
However, only a small percentage of those who owe back taxes do qualify for uncollectible status. At Precision Tax Relief we will give you our best advice as to whether you are a good candidate.
If IRS uncollectible status is not a viable option, there are other options. We have an excellent success rate with the Offer in Compromise program and in negotiating installment agreements.
How can you file for hardship with the IRS?
When you work with Precision Tax Relief, your Case Manager will use your financial information to demonstrate that you are unable to make any kind of payment to the IRS.
We will need documentation supporting your expenses, income, assets and liabilities. If the IRS requires that you complete a Collection Information Statement, we will walk you through submission of that information.
One of the best ways to secure uncollectible status is by submitting unfiled tax returns and the current year tax return, even if you can’t pay. It is important to demonstrate to the IRS full compliance and avoid any new late filing penalties. At Precision, we have extensive experience bringing our clients up to date with their unfiled taxes and filing in-year tax returns.
The priority of the IRS is to see that you remain out of tax debt in the future. They are looking for certainty that you have resolved the underlying issues causing your tax debt. We may need to adjust the amount of taxes withheld by your employer on each paycheck. If you are self-employed, the IRS will usually require that you make quarterly estimated tax payments for the current year. We can help with that, as well.
At Precision Tax Relief, we know what the IRS looks for and how best to satisfy their requirements for uncollectible status. As licensed professionals, we can help you complete the Collection Information Statement, maximizing and capturing all allowable expenses and negotiating for exceptions.
Not sure whether Currently Not Collectible status is in your best interest? We can accurately assess your case in a free initial consultation. If uncollectible status isn’t ideal for you, we may steer you towards a settlement or payment agreement with the IRS. You can count on our best advice.
That’s why Precision Tax Relief has a 98% satisfaction rating in more than 700 reviews—more than any other tax relief agency.
We Can Help You Stop IRS Collections
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