Someone who earns currently non collectible status has proven to the IRS that they do not have the means to pay back a tax debt they owe. Once a person reaches this status, the IRS will not attempt to collect taxes.

So what does non collectible status mean for the tax debt?

Currently not-collectible status is not a way of avoiding tax debt forever—it is simply a way of delaying the repayment of debt while the taxpayer sorts out their finances. The IRS will continue to assess interest and other tax penalties, and might even keep tax refunds and put them toward the existing debt.

Who Is Eligible For Non Collectible Status?

There are a variety of circumstances that may cause someone to be eligible for the IRS’ currently not collectible status. Taxpayers with this status must be facing financial hardship and meet at least one of these requirements:

  • Have just a few years left on a 10-year statute of limitations
  • Make less than $84,000 per year and have almost no money left over after paying for living expenses (must meet the IRS living expenses guidelines)
  • Get income exclusively from Social Security, unemployment, or welfare benefits
  • Are unemployed, with no alternative income source

What Qualifies As Financial Hardship?

The IRS considers a person or business to be in financial hardship if they have trouble paying for basic living expenses as outlined in the IRS guide. The person may not have any money left over after paying for basic expenses, or they may have just a little bit of money left, leaving them unable to pay taxes. The IRS determines financial hardship based on income level.

How To Request Currently Non Collectible Status

If you’re someone facing financial hardship, you may qualify for non collectible status. Here’s how to request currently non collectible status:

 

  • Fill out a Form 433
  • Gather proof of income and expenses to prove your financial hardship
  • Contact the IRS by letter or phone to request non collectible status
  • Gather additional documents the IRS asks you to send in
  • Fax in your Form 433 and other documents
  • Wait to receive currently non collectible status

Need help determining if you qualify for non collectible status? Schedule an appointment with Tax Help MD to find out more about requesting this status or to learn how long non collectible status might last for you. We can also help with any other tax questions or issues.