Do You Owe Money to the IRS But Can’t Pay? Try This.

by | Nov 4, 2022 | IRS, IRS Settlement Options, Tax Lawyer

When you owe back taxes and can’t afford to make payments, it may be time for a special tax status known as currently not collectible. This means your debt is still valid even though there’s no chance of recovery. The IRS can no longer garnish your wages or seize property when you’re approved for currently not collectible status. Don’t forget these debts, though, because the IRS is still looking for payment. 

What is Currently Not Collectible Status? 

The IRS will place your account in currently not collectible status if you can’t pay back taxes and reasonable living expenses. You may request this by submitting the proper form with documentation that proves how much income you have left over that is available to make a payment, along with any assets that have been sold recently to cover mounting debts – like homes! 

To qualify for the currently not collectible status, you will need to put together a case that you will present to the IRS. Gather copies of your bills,  proof of your income (pay stubs, bank statements, alimony, etc.), and your investments. Documenting your inability to pay is essential because if the  IRS determines you cannot afford your necessary expenses, it can grant you status.

When dealing with the IRS, having a professional in your corner is best.  The IRS can be very intimidating and might ask invasive questions that could land you deeper into trouble if you do not know how to answer appropriately. Remember – they are not your friends; their job entails collecting what they believe you owe, so make sure your interaction stays as simple as possible. That is why it is crucial to reach out for help from one of our tax resolution specialists. 

Temporary Solution 

If your status is approved, you can and should still file your current and future taxes. This status only applies to your back taxes that the  IRS is looking to collect. The currently not collectible status is simply a  bandaid to help you get back on your feet. That way, you can put yourself in a better position to make a payment in the future. The IRS may review your status every year or two if it looks like there is potential for repayment. You will only be able to keep the status active if you still can not pay your back taxes. 

Statute of Limitations 

The IRS is an institution that prides itself on being collections-oriented.  They will try to collect outstanding taxes for only 10 years from the date they were assessed against you. Once the 10 years is up, the IRS can no longer collect the back taxes. This also applies if you have the currently not collectible status. If you do not have the status, or are in an installment agreement, or have an offer in compromise pending, the IRS can garnish wages and add more penalties to your case, making things worse for you as well as your wallet.

In today’s harsh economic climate, many families struggle to make ends meet. If you’re worried about the IRS garnishing your wages, levying bank accounts, or filing liens against your property for non-payment of taxes you owe, then reaching out may give you some peace of mind. Our firm will help explain all available options to relieve any anxiety associated with these situations because we know how intimidating this can be if nothing has been done before. There is a solution to every IRS  problem. Connect with one of our tax resolution specialists to see if you qualify for the currently not collectible status or any other IRS settlement options you may be eligible for and the best next steps for your situation.

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About Daniel T.A. Cotts

Daniel is a skilled Tax Attorney who moved to Corpus Christi in 2019 to expand his practice and return to Texas. With over 26 years of experience in the legal profession, Daniel brings a wealth of knowledge of Taxation, IRS Dispute representation & resolution, Estate Planning, Accounting, and Business & Contract Law to South Texas.


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