The state department of revenue and the IRS are different bodies with their own unique rules and methods for collection. You may be "uncollectible" in the eyes of the IRS, but not the state. Hope this helps!
Andrew B Gordon is a CPA and attorney licensed to practice law in Illinois. The information provided here is for educational purposes only and is not intended as legal advice for a particular matter. This response does not create any attorney-client relationship with the author. For specific advice about your particular situation, please consult an attorney.
The "uncollectable" status determined by the IRS is for federal taxes only. And it is only temporary. They can continue to follow-up and wait until they believe they can collect, and then you will hear from them again. As for the State taxes, they can still seek payment from you, and depending on your particular state statutes, they can seek criminal as well as civil penalties (fines) for failure to file state tax returns and pay state taxes.