I owe the IRS a tax debt and I cannot afford to make the monthly paymentes. What can I do?
You can ask the IRS to place your tax accounts into “currently not collectible” status until you are able to make monthly payments. What is Currently Not Collectible Status? If the IRS agrees that you do not have enough income to make monthly payments towards your tax debt, it will place your accounts into “currently not collectible” status. Although the IRS will continue to add penalties and interest to the amount due, the IRS will not try to collect the unpaid tax from you. Your tax accounts can remain in currently not collectible status as long as you cannot afford monthly payments.
The IRS will review your accounts once each year to see if you are able to start making payments. If you are still unable to make monthly payments, the IRS will keep your accounts in currently not collectible status. The IRS will send you one statement each year to remind you that you have an outstanding tax balance. You must continue to file your returns each year to remain eligible for currently not collectible status. If you are due a refund for any year in which you file a return, the IRS will keep your refund and apply it to your outstanding tax debt. It is possible, based upon your income that your account will stay in currently not collectible status for several years. After a specified time, the IRS by law is no longer able to try to collect this money from you.
Who is eligible for currently not collectible status?
Currently not collectible status is only available to taxpayers that cannot afford to make monthly payments. You also must have filed tax returns for all the years in which you were required to file taxes. Whether you are required to file depends on your income during the tax year. For example, if you were self-employed in 2005 and you had net self-employment earnings of $400 or more, you were required to file a tax return. If you were single and you had wages of more than $8,250 in tax year 2005, you were required to file a tax return. If you are not sure whether you had a filing requirement, you can call the IRS at 1-800-829-1040. An IRS customer service representative can tell you whether you had a filing requirement and if you need to file tax returns for any years. He or she can also send your wage information to you so that you can file your returns.