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If we can demonstrate to the IRS that a taxpayer is not able to pay the delinquent amount owed to the IRS by way of an Installment Agreement or an Offer in Compromise, we can request that the IRS places the taxpayer’s account on a status called “Currently Not Collectible”.
Only Taxpayers with negative monthly cash flow will qualify for Currently not Collectible status.
Currently Not Collectible status removes the taxpayer’s account from the active collection efforts by the IRS and will remain in effect until the taxpayer’s financial situation changes or until the tax liability runs out.
It does not however remove or eliminate the tax debt, it only puts the tax debt on hold. The tax debt is still owed and will continue to accrue penalties and interest.
If a taxpayer’s income increases to a level making it possible to make payments to the IRS the taxpayer will then be notified by the IRS that collection activities on his/her delinquent account will be reinstated.
While a taxpayer is in Currently Not Collectible status, his/her credit rating may be negatively affected as the IRS will file a lien against the taxpayer’s property or Social Security Number.