Currently Not Collectible
What is Currently Not Collectible?
This tax relief settlement is the least one that our firm uses. It allows the IRS to cease collections and to temporary suspend a taxpayer’s account and tax debt. Better put, it stops collection actions the IRS could take while on this agreement. The tax debt is still owed and penalty and interest is still accruing. However, the time while in this status goes towards the statute of limitation to collect the tax debt.
Although we have put clients on this agreement we believe this only delays the inevitable. The tax debt is still owed and the agreement will be terminated once the taxpayer has the ability to pay in the future.
Of course if we determine this solution to be the best tax relief option we will pursue this agreement.
When is it Used for Tax Relief?
This agreement is made with the IRS when we can show that a client does not have the ability to pay the tax debt. This is not a permanent program so it's not an ideal long-term solution but this can provide valuable time for clients when the situation calls for it.
In many cases, this program is the best route to take. It can act similar to an offer in compromise but without the challenge of getting approval for it. This typically is reserved for older clients as well as a few other situations that clients may be in.
It's important to use a professional to prepare a currently not collectible package for the IRS because it may not get approved if prepared individually.