A taxpayer with no ability to pay their outstanding tax liability can be declared Currently Not Collectible (CNC) status by the Internal Revenue Service. The burden of proof is on the taxpayer to qualify for “hardship” cases.
Qualifying for CNC status is not easy. Mistakes can cause a taxpayer to be rejected, or the taxpayer may unwittingly provide information that can hurt his case.
A taxpayer facing an insurmountable tax debt or significant hardship needs the protection and expertise of a tax professional specializing in tax debt resolution. It is the focus of the IRS to collect all funds owed. Your tax professional is on your side and is an expert in helping you qualify for this status.
Advantages of Currently Not Collectible Status
- All collection activities must stop, i.e. letters, phone calls, bank levies, garnishments, etc.
- The 10-year statute of limitations to collect the tax debt continues to run during this time
- The tax debt may never have to be paid
- Payment of the tax debt would cause undue hardship for the taxpayer, leaving them unable to cover necessary living expenses
- Bankruptcy/suspension of corporate business functions with no remaining assets
- Death of a taxpayer
- Inability to locate taxpayer assets
- Inability to locate a taxpayer
- Special action, i.e. tax debts for military personnel in a combat zone
By declaring your case as Currently Not Collectible, the government is confirming your financial condition is so serious that you cannot make even the smallest payment.
They are required to send you an annual statement of the tax amount owed, which is not a bill. Each year you remain in CNC status, you will be required to submit an updated financial report.
If your status ends, a tax professional can assist you in qualifying for another tax relief program that will enable you to reasonably pay off your tax debt. Give us a a call to see what options you have in this regard.
Benefits of Working with a Tax Professional
Much negotiation is required with the IRS when attempting to gain acceptance of your financial status. By working with a professional like us, we can shield you from these negotiations, and will battle them on your behalf. Whether they be Revenue Officers, or the main organization itself, we go to battle day-in and day-out on our client’s behalf.
Statistics show taxpayers who attempt to qualify for Currently Not Collectible status on their own are often not successful. Do not allow the IRS to intimidate you into accepting a less-than-satisfactory tax debt resolution.