When it comes to tax debt, you have several avenues of recourse the IRS makes available to you as a debtor. Debt negotiation is never pleasant, and bankruptcy is almost exclusively the only option that will result in complete absolution. However you go about clearing your tax debt, prepare for some difficulties. One option that may be available to you is declaring your tax debt “currently not collectible” with the IRS.
Declaring “Currently Not Collectible”
In order to make this declaration, you have to show the IRS sufficient proof that you don’t have the funds to pay your tax debt. This declaration puts a stop to wage garnishments and tax levies while you are protected under this status. Even better, the ten-year statute of limitations that is applicable to federal tax collections is not put on hold. While we certainly don’t recommend trying to avoid having to pay your taxes for these ten years, if you are close to the end, it can be an option for you to consider.
In order to request your tax debt to be recognized as “currently not collectible” you will have to submit Form 433-F to the IRS. This Collection Information Statement requires a highly detailed listing of your assets, expenses, and income in order to determine if you qualify.