So, you agree you owe the IRS, but you can’t pay due to your current financial situation. If the IRS agrees you can’t both pay your taxes and have enough for your reasonable living expenses, it may place your account in Currently Not Collectible (CNC) status. Think of it kind of like pushing the pause button on your tax problem.
While your account is in CNC status, the IRS generally won’t try to collect from you. For example: It won’t levy your assets and income. However, the IRS will still assess interest and penalties to your account, and may keep your refunds and apply them to your debt. You’ll also continue to receive an annual bill from the IRS because that is required under the law. Additionally, the Internal Revenue Service may file a Federal Lien to protect the government’s interest in collecting the money that it is owed.
Before you can be considered Currently Not Collectible and have the IRS place your account in CNC status, you will have to file any past due tax returns if you are not in compliance with the Internal Revenue Service regarding any years that you have not filed.
If you request CNC status, the IRS will ask you to provide financial information, including your income and expenses, and whether you can sell any assets or get a loan. This part can be a lengthy chore as it requires a substantial amount of information. Additionally it is very important that these documents are filled out correctly. If the IRS can’t understand your financial situation, how will they be able to see if you can qualify for CNC or other options?
If you are granted CNC, the time the IRS will most likely review your income annually to see if your financial situation improved. Generally, the IRS can attempt to collect your taxes up to ten years from the date they were assessed, though the ten-year period is suspended in certain circumstances. The time the suspension is in effect will extend the time the IRS has to collect the tax.
Because the IRS won’t suspend interest and penalty charges, even if it stops trying to collect the balance due, you may want to consider other possible payment options within your means before asking the IRS to place your account in CNC status.
If you would like to know more about CNC or Currently Not Collectible status, call my office or send me an email. The contact option on the right side of this page is also a great way to get in contact with us. CNC may be a great option for you if you qualify. Proving to the IRS that you cannot afford to pay them at this time is not exactly an easy task and it does take some time to go through this process. I am more than happy to help you try to resolve your tax problem. Remember this, even if you do not hire me or any other professional to help with your tax problem, please don’t keep running. That only makes it worse. Email me [email protected] for more info on CNC Status or other options that may be available to you.