Not everyone is flush with ready cash at any given moment. Many families in Minneapolis-St. Paul work on tight budgets. So, when the IRS drops a notice on you that says you have an outstanding tax obligation due, it may not only come as a surprise but also cause you a lot of consternation. If you don’t have the funds available to pay, what are you supposed to do?
It’s important to understand that most IRS agents aren’t hell-bent on bracing taxpayers to the point of making them squirm. Regardless of their motives, however, that doesn’t make it any easier on you. And if you’re like most people in this region of the country, you probably want to clear the debt as quickly as you can. If you are not able to pay, though, there are options.
One among them might be for you to seek a designation from the IRS that your account is “currently not collectible.” What that means is that the IRS has examined your financial situation and determined that you aren’t able to meet your tax debt because of some current financial hardship. Many people have found themselves in just such circumstances more than once in the past few years.
It’s important to be aware that obtaining this account status doesn’t erase any of your obligation and any outstanding amount will continue to accrue interest and possible penalties until the bill is paid in full. The IRS still expects you to file proper returns and may ask you to fill out any number of other forms to prove your hardship circumstances.
If you wonder if your conditions are such that uncollectible status is a possible option, you should check with an experienced tax attorney to get an assessment of your situation.
Source: IRS.gov, “The Collection Process,” accessed June 9, 2016