J Thomas Black
Board Certified, Consumer Bankruptcy Law- Texas Board of Legal Specialization

I have prospective clients come in to my law office in Houston to talk about their I.R.S. problems, and some of them can qualify for what is called "currently not collectible" status. That means that the IRS cannot currently collect from them. The IRS puts the taxpayer's file on a shelf, and the 10 year "statute of limitations" continues to run.

Many people think that taxes owed to the government never go away. Or that they go to jail if they can't pay their taxes in a way acceptable to the IRS. Wrong and wrong! The IRS has only (I say "only" but it is a long time) 10 years to collect taxes from you, that includes income taxes and payroll taxes.

That 10 years is measured from the "assessment" date, when the IRS determines how much you owe, which usually occurs within a couple of weeks after you have filed your tax return. If you are in "uncollectible" status, the IRS does not try to collect from you. When the 10 years runs, the taxes are no longer enforceable against you, and the bills stop coming.

This is not a panacea for everyone; you must have low or no income, and few if any assets. If you have IRS tax liens filed against you, when the statute of limitations runs, the liens are either released or you can ask the IRS to release them, and they only have 30 days to do so.

Now if your situation changes, and you start making significant money again during the 10 years, of course the IRS can try to collect from you again. That's why they call it "currently not collectible" or CNC for short. Sometimes they call it "53ing" the account, for the IRS code 53 that signifies that the account is being considered currently not collectible. Examples of situations where they can report the account are: (a) unable to locate taxpayer or assets; (b) running of part or all of statute of limitations; (c) death of an individual with no assets; or (d) collection of taxes from an individual would create a hardship and leave the person with no way to pay necessary living expenses.

It is possible for the IRS to chase you for more than 10 years for taxes, in certain limited circumstances. For example, if the collection of the taxes was "tolled," such as by filing an Offer in Compromise, or a bankruptcy. Or they can sue you in U.S. District Court and obtain a judgment for the taxes, which can last a lot longer than 10 years.

But they generally only go to the expense of suing if you are someone famous, like Willie Nelson, or if it is an awful lot of money, and it may be collectible some day. They do not usually sue ordinary people to reduce tax debt to judgment, and the IRS loses billions of dollars every year that becomes unenforceable by lapse of time. If you have serious IRS problems, please consult a professional such as myself that handles these matters on a regular basis.

You have many other rights in dealing with the IRS, too numerous to mention here. If you live in the Houston metro area or surrounding counties, give my office a call at 713-772-8037 to make an appointment to meet with me. The first visit is free and takes about an hour.

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