Effective Currently Not Collectible Strategy
IRS Currently Not Collectible Status aka Currently Not Collectible
Currently not collectible occurs in financial situations when there are times when you understand that you owe the IRS and due to your current financial situation, you are unable to pay the amount of can't pay off back taxes, penalty, and interest due.
When the IRS decides that you can't afford both your taxes and living expenses, the account may be placed in the status of Currently Not Collectible (CNC).
While your account is in a currently not collectible status, the IRS generally won't try to collect from you.
The IRS may place your accounts in CNC status, even if you have unfiled returns and are in a hardship situation, if you meet the requirements. The currently not collectible form is a 433-f.
It won’t levy your assets and income. Although the IRS has temporarily closed your case. you still owe the money to the IRS. They may reopen your case in the future if your financial situation improves.
Before the IRS will place your account is in currently not collectible status, it may ask you to file any past-due tax returns.
If you request currently not collectible status, the IRS may ask you to provide financial information, including your income and expenses, and whether you can sell any assets or get a loan.
During the time the IRS may collect the balance you owe, it may review your income annually to see if your financial situation improved.
Does currently not collectible status affect the 10 year statute of limitations?
The statute of limitations continues to run while a taxpayer is in currently not collectible status, so if the IRS is unable to collect the back taxes within this 10-year window, the debts will inevitably expire. Therefore, there is no effect on the currently not collectible statute of limitations.
Because the IRS won’t suspend interest and penalty charges, you may want to consider other possible payment options within your means before asking the IRS to place your account in currently not collectible status.
TheCPATaxProblemSolver specializes in a great array of tax debt resolutions, including dealing with currently not collectible (CNC) accounts.
See my blog 5 IRS Tax Relief Programs for more information.
Speak to Keith Jones, CPA TheCPATaxProblemSolver about Tax Debt Relief.
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UNDERSTANDING CURRENTLY NOT COLLECTIBLE
CNC indicates that a taxpayer has no ability to pay his or her tax debt. That taxpayer must demonstrate that they are in a state of severe financial hardship. They can’t even liquidate assets or make monthly payments to clear their back taxes. In these circumstances, the IRS declares that an individual’s account is currently not collectible.
As a taxpayer, you are required to submit substantiating documentation and detailed financial forms to the IRS agent for a thorough review. Once the IRS officially declares that you are currently not collectible, they must stop all collection activities, including wage garnishments and bank levies. Next, the IRS is required to send annual statements to the taxpayer, which remind him or her about the amount of tax still owed. However, it is not viewed as a bill.
If the IRS cannot collect the tax within a 10-year statutory period, the debts automatically expire.
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