Currently Not Collectible: When the IRS Pauses Collection
If paying your tax bill would take money you need for basic living costs, the IRS can set your account to currently not collectible status. Collection stops mostly at that point, yet the whole balance remains due and interest and penalties keep piling up.
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What does currently not collectible mean?
This is a hardship status, also called a temporary delay of collection. Granting this status means the IRS has accepted that you cannot pay right now, so it stopped most collection, as its delay page shows.
No forgiveness applies here. The debt is not written off. Interest and penalties keep rising until you pay off the balance. If a federal refund is owed to you, the IRS takes it and applies it to what you owe.
Who qualifies for IRS hardship status?
If paying your taxes would cause financial hardship, you qualify, since what you spend on basic living costs leaves nothing for the IRS. The IRS may ask for a financial statement before it agrees.
- Form 433-F, a brief collection information statement.
- Form 433-A, for wage earners and for people who work for themselves.
- Form 433-B, meant for businesses.
How do you ask for currently not collectible status?
Call the IRS at 800-829-1040 or use the number shown on your bill or notice. Keep on hand proof of your income, property, bank accounts and monthly living costs; the IRS may want to check it.
If you can handle a monthly payment, the IRS may then offer a plan to you instead. Take a look at a partial payment plan. That plan pays down part of the debt before the IRS deadline to collect.
What happens in the period when your account is not collectible?
There is no fixed time limit. Later, the IRS may check your finances and restart collection if your income improves. The IRS may also file a Notice of Federal Tax Lien to protect its claim on your property.
Under Topic 202, the IRS window for collecting a tax is usually 10 years and the clock starts at the date of assessment. Hardship status does not stop that clock.
Questions on hardship status
Does currently not collectible status erase my tax debt?
No. Nothing gets forgiven. The whole amount remains owed and interest and penalties keep rising until you pay it.
Will the IRS take my refund while I am not collectible?
Yes, that happens. Any federal refund owed to you goes toward what you still owe in tax.
Is hardship status better than an offer in compromise?
Each does something else. If your income is too low, a compromise offer settles what you owe for less and hardship status pauses collection. A tax pro can check your numbers and tell you which option works for you.
Do basic bills and the IRS together exceed what you can pay?
You can have a licensed tax pro prepare the financial statement, review your budget with you and request the pause or a plan you can keep. Or enter your number in the form.
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