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Negotiation of “Non-Collectible Status”

For some delinquent taxpayers, the value of their assets may disqualify them from the Offer in Compromise program. Although value in an asset may eliminate the possibility of settling your tax debt for less than you owe, it does not necessarily mean that you have the ability to make monthly payments to the IRS. If your financials indicate that your necessary monthly expenses exceed your gross monthly income, then your tax file may qualify for a non-collectible status. Essentially, if the IRS determines that you do not have the funds to pay them on a monthly basis after paying your necessary living expenses, they will place your file in this status.

Below is a list of some of the terms and conditions of this status:

  • The status is temporary and the IRS does reserve the right to evaluate your financials at a later date to see if you still qualify
  • Penalties and interest continue to accrue
  • If a federal tax lien has not previously been filed, one will be
  • If you choose to do so, voluntary payments may be made toward your tax debt while your file is in this status and it will not disqualify you

If you think you may qualify for a Non-Collectible Status or would like to discuss further, please call our office to speak with one of you tax specialists at 1-800-721-3890.