September 14, 2007, Newsletter Issue #28: Uncollectible Category

Tip of the Week

DebtHelp.com Tip: Whenever a taxpayer cannot pay their delinquent tax bill, and there is no sign of them being able to, the IRS may put them into the category known as “uncollectible”.

Also known as an ‘undue hardship’ case, the IRS has no promise of collecting their tax debt from someone classified as “Uncollectible”. The taxpayer in this category has little, if any, assets. So, the IRS cannot levy anything. And, the taxpayer has no income beyond that necessary to meet living expenses.

If you feel that you fall into this tax resolution category, notify the IRS. The IRS personnel will prepare a Form 53 which will temporarily inactivate the IRS collection activities. This Form does not stop the interest from accruing, though. It also will not stop you from owing taxes. Only the IRS collection process is put on hold, temporarily.

About once a year, the IRS will re-exam your financial status. You will be required to complete a new Financial Statement (Form 433A). Fill out this form to the best of your abilities. The IRS will research your answers.

The IRS problem resolution method known as “Uncollectible” is the category consisting of taxpayers showing the least hope of ever improving. Taxpayers classified as ‘uncollectible’ do not have any prospects of a more positive livelihood, better training, better education, etc. Taxpayers with large tax debts, falling into old age, poor health, and poor education have a higher likelihood of being classified as ‘uncollectible’ than does a college educated, healthy 20 year old.

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