If you owe money to the IRS for taxes, you likely will have to make payments to avoid unpleasant consequences. These negative outcomes include fines, interest charges and perhaps even jail time.
In some circumstances, though, the IRS can temporarily suspend your need to pay your tax bill.
The delay of the collection process
Information from the IRS describes some of the conditions that apply to currently not collectible accounts. The tax agency makes a determination on your back taxes based on a variety of information. Once the agency decides, the following conditions will likely apply:
- The suspension is temporary
- Penalties such as interest might apply
- The debt does not disappear
A currently not collectible status means the IRS determines that you cannot currently pay your tax bill. The agency bases this information on your assets and your monthly income and expenses. You will probably have to fill out a Collection Information Statement which provides details on your financial situation.
The review process
The suspension of your need to pay taxes does not go on indefinitely. The IRS will continue to monitor your situation and make changes if you can make payments. At some point, the IRS might initiate a Notice of Federal Tax Lien which could require payment. The IRS has an interest in making sure all individuals and businesses pay their required taxes.
Tax law has many complicated features that most people do not completely understand. Professional legal help might allow you to avoid penalties and other damaging actions from the IRS.