There are many cases where taxpayers are not at all in a position to pay their tax debt to the IRS. If you are a person with no means to pay the taxes that you owe, have very few assets which can be taxed and have an income which is just enough to meet the necessary expenses, the IRS may consider you in the category of ‘not collectible’.
The state where the IRS approves that taxes cannot be recovered from you at that particular time is when they can place you as currently non collectible. In case a taxpayer qualifies for the currently not collectible case, the tax debts are not waived off; they still remain as they were. Also, the interest or penalties keep accruing on your tax debt. The only benefit that you receive is all activities for recovering money from you are suspended by the IRS for a temporary period.
The IRS constantly monitors your financial condition and watch out for improvement in it. Once it improves, the IRS demands the payment of your tax debts from you. The review of your finances takes place once a year normally. You are required to send a statement of your finances so that it can be reviewed by the IRS. Remember that this statement should be accurate so that you don’t land yourself up in further IRS complications.
In order to receive the status of currently not collectible, you need to prove a couple of things to the IRS. First and foremost, the IRS should be convinced that you have meager sources of income that are sufficient only to cover your basic needs and nothing else. The nest thing to prove is that you don’t own any noteworthy asset which can allow you to clear off your IRS tax debts. For doing so, you should fill the IRS Form 433-F which will report all your assets to the IRS. Although, one thing to remember is that the status is only a temporary solution for your problem of tax debts. Once you gain the currently not collectible status, it is recommended that you find out a permanent solution in order to pay off your tax debts.