The tax term "currently not collectable" refers to the fact that a taxpayer simply does not have the ability to pay his or her taxes - possibly for a variety of reasons. Maybe a taxpayer or family member has suffered a serious illness; or the taxpayer has lost their job, or maybe the taxpayer has very little or nothing in the way of assets or property for the IRS to pursue.
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Regardless of the reason, a "currently not collectable" status is a perfectly legal status for the taxpayer to be granted by the IRS. If the IRS does declare a taxpayer currently not collectable, the IRS must cease all collection actions, including garnishments and levies. An annual statement will then be sent to the taxpayer for taxes still owed, but the statement is just a matter of record, not a tax bill.
While the tax debt remains in "currently not collectable" status, the legal ten-year statute of limitations still applies. If the IRS cannot collect the tax within the 10-year statutory period, the tax debts will have expired.
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