When a taxpayer is experiencing a financial hardship they may be eligible for Currently Non Collectible status. Currently Non Collectible status is available to put a taxpayer’s account on hold from collections activity due to a financial hardship. The IRS evaluates your gross monthly income against your necessary living expenses. The IRS will allow you to keep monthly income you earn to pay necessary living expenses only. The amount earned over the amount needed to pay necessary living expenses is your disposable income. This is the amount the IRS will request of you to pay towards your tax delinquencies. Upon making a showing that you do not currently have sufficient disposable income to pay tax delinquencies the IRS will accept Currently Non Collectible status. Currently Non Collectible status is a form of resolution that stays in place unless or until the IRS receives reports of greater income in future years than that which you earned when your case was put in Currently Non Collectible status. Some taxpayers stay in Currently Non Collectible status for long periods, others enjoy a break from collections activity briefly while they get back on their feet. Currently Non Collectible status does not prevent the continued accrual of interest and penalties against a taxpayer’s account, so it should only be pursued in situations where the taxpayer is older in years, where the taxpayer’s liability is close to expiring, or where the taxpayer’s financial circumstances are too uncertain to make a determination as to whether a payment plan or Offer in Compromise should be pursued.
