The IRS will put a taxpayer in Uncollectible Status if the taxpayer can demonstrate to the IRS that they do not currently have the ability to pay back their tax debt. While a taxpayer is in Uncollectible status the IRS will not enforce any collection action against them. This will effectively stop any IRS levies or IRS seizures. However, the tax debt will still exist in the IRS records.
If the taxpayer's financial situation improves, they will have to begin paying back the tax debt again, with interest. Uncollectible Status does not permanently resolve a tax debt like an Offer in Compromise would, but it does take some of the pressure off when a taxpayer is not financially able to make payments on their debt.
If an individual is placed in Uncollectible Status, they can usually count on being left alone by the IRS for at least 12 months. However, the IRS does have the right to re-open the taxpayer's file at any time and request information about the taxpayer's ability to start making payments again.
It is up to the taxpayer, or their representative, to prove to the IRS that they still qualify for Uncollectible Status when the IRS re-opens their file.
If you need help resolving your IRS tax debt, please call us today at (317) 782-4204 for a free consultation.
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Joe S., Greenfield, Indiana -- Taxes Owed: $23,500 Result: $1,600 accepted offer in compromiseI was self-employed working as a sprinkler fitter in commercial construction. Business was always up and down and I never had enough discipline to set back money to pay my federal income taxes. READ MORE...
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