The IRS is sending you tax bills, but you’re not able to afford to pay them so the IRS threatened a tax lien or tax levy on your property. You find that you can negotiate a payment plan with the IRS but you still can’t afford to contribute anything to a monthly payment plan. Fortunately, there’s another solution available to you. When you’re unable to make any IRS payments, you may be eligible for Currently-Not-Collectible (CNC) status.
What Is Currently-Not-Collectible Status?
If you can’t afford to pay any sort of payment toward your IRS tax debt, you’ll need to request CNC status. CNC status is designed to assist taxpayers who have the inability to resolve their tax debt. Keep in mind, however, that even though being on CNC status will suspend all IRS collection activities including levies and garnishments, it will still continue to charge accrued interest and penalties to your tax account and can possibly arrange to apply any future tax refunds you are owed to your unpaid debt.
Does Being On CNC Status Mean I Won’t Need To Pay Any Of My Tax Debt?
If you are placed on CNC status, your tax debt is NOT forgiven. Your tax accounts will remain in CNC status for as long as you aren’t able to maintain your monthly expenses and monthly payments. Penalties and interest continue to accrue on your back taxes while you’re in non-collectible status. In the future when your financial situation improves, the IRS may notify you that the collection process will resume.
The IRS May Grant You CNC Status If These 3 Reasons Apply
To be granted CNC status by the IRS, you must prove to the IRS that paying anything to your tax bill would cause you financial hardship. At this time, you’re still obligated to file tax returns and keep records of any income earned during this period. If your income doesn’t improve before the end of the IRS 10-year statute of limitations for collection and you still remain under CNC status during this time, the IRS will write off your tax debt.
Collection Statute Expiration Date (CSED)
The CSED is a scenario that could possibly help boost your chances of obtaining CNC status because you might not be able to pay the IRS without economic hardship within the time frame before the CSED.
Relying On Government Assistance
Examples of government assistance can look like the SNAP program, disability programs, Social Security, and public housing programs that aid in helping Americans meet their minimum needs. If any of these programs are your main source of income, it’s likely that making any tax debt payments may be extremely difficult for you. In this case, you’ll have a good chance of requesting CNC status; that is, until your financial situation improves, of course, and then the IRS will inform you that they’ll be resuming the collection process.
You’re Unemployed And Unemployment Compensation Is Your Only Source Of Income
Unemployment compensation is usually below your wages so applying for CNC status can work in your favor as opposed to against you.
Your tax debt will continue to grow since penalties and interest continue to accrue on your tax debt. No taxpayer in their right mind wants to owe money to the IRS especially if it becomes a struggle to pay off. It is very important for taxpayers to remain tax compliant because it will save you interest and penalties on the current year and prevent you from a continuous circle of always owing tax.
The IRS Fresh Start Program consists of 4 main programs that are accessible to taxpayers who owe much more than they can reasonably afford to pay. The four major programs are as follows: Currently Not Collectible (CNC) Offer In Compromise (OIC), Installment Agreement (IA), and Penalty Abatement (PA). These relief programs allow qualified taxpayers the option to reduce or even eliminate their tax liabilities. These tax experts will help you qualify for the program and help you figure out which options will give you the most suitable outcome.
Resolve Your Tax Bills
If you’ve found yourself in a nasty mess with the IRS, take a deep breath. For taxpayers who may have difficulty paying off an excessive amount of tax debt, there’s a new and improved relief program that consolidates many major relief programs into a one-size-fits-all assistance program. Any issues regarding back taxes, unfiled years, or any other tax-related problems may be solved through one program; the IRS Fresh Start Program!
How Simple Is Qualifying?
Considering that the Fresh Start Program is a federal program, you would think meeting the qualifications may be very difficult, but really, it’s a lot simpler and quicker than you think. Take the following steps in order to find out if you are eligible in as little as 3 minutes.
- Fill out some basic information about yourself and your back taxes here.
- Have a representative reach out to you to discuss your eligibility.
- Go through the enrollment process and finally reduce or eliminate your tax liabilities.