Currently Not Collectible; also referred to as Uncollectible Status or Status 53, is an interesting type of IRS tax payment solution not often discussed. This solution is something similar to an installment agreement; it’s like a payment plan with no payment. The downside of this is that the interest and penalties continue to accrue and the IRS reserves the right to request a periodic review of financial information and resume collections in the future.
With those downsides, you may ask, “Why someone would want to ask for Uncollectible Status?”
There are a few reasons that, given the right circumstances, asking for Uncollectible Status could be a great IRS tax payment solution:
1. Too Much Equity
- If you have an asset such as a house, that would have too much equity to allow for a successful Offer in Compromise; but not enough cash for a payment plan with the IRS, the Currently Not Collectible Status may be a great solution for a very difficult circumstance.
2. 10 Year Statute of Limitations
- The IRS only has 10 years to collect once it’s determined that you owe. If the statute of limitations is about to expire, Currently Not Collectible is an excellent solution, even better than an Offer in Compromise! It’s critical to know if the statute for collections is going to expire soon if you are considering applying for an Offer in Compromise, as An Offer in Compromise extends the collection statute.
- If you don’t know when the Statute of Limitations will expire, you can get the information from the IRS via the Freedom of Information Act. If you want help finding out when the statutes expire or have any other IRS tax questions, we can help. We have assisted people with this process for decades!
How Do I Reach Currently Not Collectible Status?
To get deemed uncollectible by the IRS you have to supply the IRS with the appropriate financial information. It’s not an easy process by any means, and is one of those areas where it really pays to talk with a tax professional face to face. If you qualify and the circumstances are right, Currently Not Collectible may be a great IRS tax payment solution, especially because it is easier than getting an Offer in Compromise accepted.
Contact us for help walking through the different types of solutions that may be available!