Under federal law, the IRS has a limited amount of time in which it can collect outstanding tax liabilities. Reasonable collection potential is the amount of money that the IRS could reasonably expect to collect before the expiration of the collection statute. To determine reasonable collection potential, the IRS will look at a number of factors, including future income potential (determined by current gross monthly income and reasonable monthly expenses) and the equity that you have in your assets (such as retirement accounts, vehicles, real estate, and life insurance). The IRS will then use a formula of future income potential x 120 + equity in assets to determine reasonable collection potential.