The IRS has the ability to classify you as “Not Currently Collectible” under extraordinary circumstances such as if you are sick or seriously ill, are unemployed or have little to no income, or are elderly and cannot pay your IRS back tax debt. They can also use this classification if you have few assets the IRS can levy against. When the IRS classifies your case as “Not Currently Collectible” they put a hold on any collections regarding your back taxes. This change in status is only a temporary solution to your tax debt problem and can change if your economic situation improves at any time.

With this solution you are still responsible for the IRS tax debt. The IRS will monitor your economic situation and if at any point it improves they will demand you pay the full amount of back taxes owed. The IRS requires you send them updated and accurate financial statements every year for them to review.

There is a statute of limitations associated with being classified as “Not Currently Collectible”. The statute of limitations on federal back taxes is 10 years and if the tax debt is not collected within that time the IRS can no longer collect on these taxes.