Can’t pay taxes right now due to temporary circumstances?  Currently non-collectible status may help.

The IRS offers both business and individual taxpayers temporarily down on their luck an opportunity to place collections on the back burner, as it were.  Penalties and interest continue to accrue, but taxpayers don’t need to make monthly payments until financial circumstances change.  Usually the IRS will reassess the taxpayers’ situation periodically to determine whether changed circumstances afford monthly payments. 

Currently non-collectible (CNC) status can benefit some taxpayers.  However, those with substantial equity in assets may be required to apply for a loan.  Moreover, penalties and interest continue to accrue, which may leave a taxpayer worse off than if they had initiated monthly payments. 

Both CNC status and installment agreements can be useful when a taxpayer is nearing the expiration of the statute of limitations for collections (CSED).  Once the ten year CSED expires, the IRS can no longer pursue collections.  Thus, taxpayers can move on to a new chapter in their life as long as they don’t run afoul of tax laws in the future.