Post by myTax Solutions on Mar 23, 2016 21:34:57 GMT
This is a very common situation for many taxpayers. Fortunately there are certain options that are available for people in this predicament. One such option is available if you can meet the qualifications for “Currently Not Collectible” status, which means that you are currently experiencing an “economic hardship”. By providing your information and the supporting documents (i.e., bank statements, copies of past due notices, etc.), if the IRS determines that you have no ability to make payments, then collection efforts against you may be put on hold. This does not mean that your debt disappears, however it just puts everything on hold. And, keep in mind that each tax period has an expiration date. This means that the longer you can keep the collection efforts on hold, the better off you’ll be. Ignoring certain exceptions that can stop the clock on the time to collect the taxes, the general time that the IRS has to collect is 10 years. This time starts with the later of either, when you filed the return, or when the IRS filed the return for you and assessed the tax. For example, if you filed a 2010 return in 2013, then the clock would not start until 2013.
The takeaway here is that if you can demonstrate that you are experiencing a financial hardship, the time for the IRS to collect will generally keeping ticking. If you continue to experience that hardship for a long enough time, it’s possible for a particular tax debt to expire all together. However, keep in mind that even if you qualify for “Currently Not Collectible” status now, your status can change in the future if your finances improve. In order to maintain this status, you can expect periodic reevaluations by the IRS to make sure that you still meet the qualifications. You also have the obligation to self-report any significant changes in your finances directly to the IRS.
The takeaway here is that if you can demonstrate that you are experiencing a financial hardship, the time for the IRS to collect will generally keeping ticking. If you continue to experience that hardship for a long enough time, it’s possible for a particular tax debt to expire all together. However, keep in mind that even if you qualify for “Currently Not Collectible” status now, your status can change in the future if your finances improve. In order to maintain this status, you can expect periodic reevaluations by the IRS to make sure that you still meet the qualifications. You also have the obligation to self-report any significant changes in your finances directly to the IRS.