How it works
Currently not collectible status is the IRS determination, based on a financial statement, that you cannot pay anything toward a tax debt without hardship. Collection pauses, though interest and penalties continue and a lien may be filed. The IRS reviews the account periodically and can resume collection if income rises. The collection statute keeps running during the pause.
Why it matters
It is a pause, not a settlement, but for a taxpayer with a near collection statute expiration date, it can mean the debt expires without payment. It requires full financial disclosure.
Example
A retiree on fixed income owes 45,000 dollars with a CSED three years away. The IRS places the account in currently not collectible status. If nothing changes, the balance expires in three years.
Related: collection statute, allowable living expenses.
