When you owe money to the IRS and cannot pay it in full there are generally 3 non-bankruptcy options available to you:
- Make a settlement offer known as an Offer in Compromise;
- Request an installment payment plan; and
- Request that your account be placed in non-collectible status.
Non-collectible status
The IRS does not want to waste it’s valuable resources in pursuing collection from taxpayers who clearly cannot pay their debts in full.
For this reason if you are able to prove that you have no equity in your assets and that you do not have any surplus income after paying your monthly necessary living expenses, the IRS will place your delinquent account in what is known as “non-collectible status.”
The IRS code for this status is “53″ and, therefore, it is sometimes called 53 status.
Full financial disclosure required
IRS Financial Statements must be provided along with bank records and other and financial information proving your inability to pay.
It is not uncommon to have a taxpayer remain in non-collectible status until the statute of limitations on collections runs out.
Non-Collectible status does not mean the debt is written off
Non-collectible status is not the same as a write-off of the debt. The tax debt remains on the books and the IRS will monitor the taxpayer’s subsequently filed tax returns to determine if there is any positive change in the taxpayer’s ability to pay the tax debt.
Non-collectible status merely means that the IRS has determined that enforced collection action would be fruitless at this time.
It does not mean that your tax debt has gone away and it does not preclude the IRS from filing a federal tax lien against you.
2 responses so far ↓
1 joe dibello // May 18, 2011 at 5:36 pm
I completed a financial hardship with irs, they concluded my taxes are “53″ status. I am 64 disabled on ssdi, i will never be off code 53. The person i spoke with said i have been in 53 for 5 years but they forgot to set up a tax lien which now they want to do. I have no assets, no car, house, property, business, credit cards, savins or 401k. What will a lien do for them, they have no hope of ever collecting 24k in back taxes.
2 Mike Corbin // Jan 19, 2012 at 4:48 pm
That’s how the IRS works. They are the government. They do what they want.
I agree with you, Joe.
When dealing with the IRS, its always better to have representation, especially in your situation.
ConsumerTaxReports.org reviews tax companies and their company profiles. If you want to make sure the IRS doesn’t try and come after any of your money – hire a tax attorney to resolve it so its not lingering.
Leave a Comment