” Currently Not Collectible” is a program where the IRS voluntarily agrees not to collect on the tax debt for a year or so.
The IRS can declare a taxpayer “currently not collectible,” after the IRS receives evidence that a taxpayer has no ability to pay. Such evidence is usually obtained from the taxpayer on IRS Form 433-F, Collection Information Statement. A taxpayer can request “currently not collectible” status by submitting Form 433-F to an IRS Revenue Officer or the IRS Automated Collection System unit.
What this means to you is once you’ve submitted the form, and the IRS evaluates your financial situation and declares you to be a taxpayer currently not collectible, then Internal Revenue Service must stop all collection activities, including levies and garnishments. In addition, as long as you are in not collectible status, the 10-year statute of limitations on tax debt collection is still running. The reason this is significant is, if the IRS cannot collect the tax within the 10-year statutory period, then your tax debts will expire… (which is a good thing).
Depending on how you look at it, Currently Not Collectible is a glass half-empty, half-full kind of status. On the one hand, the IRS must stop collection activities. On the other hand, that situation can change down the road. Don’t run past that first word, ‘currently’. Currently Not Collectible is not a permanent fix. The IRS will continue to monitor your financial situation, and send an annual statement to the you each year stating the amount of tax still owed. It’s not a bill-just a statement. However, if your financial situation improves in subsequent years, IRS collectors reserve the right to re-assess your status, and potentially remove your “not collectible” status.