Currently not Collectible
Florida & Nationwide Currently Not Collectible Status
Filing your taxes, even when you are not able to pay them, is a must. It isn't against the law to have an IRS debt, it is against the law to have unfiled tax returns. Should you agree with the Internal Revenue Service (IRS) that you owe it money, but you cannot pay, the IRS may place your account in “CNC,” or Currently Not Collectible, status. For those who are unable to meet their tax burden, CNC can be a financial lifesaver.
A taxpayer may want to seek Currently not Collectible status if their IRS debt is less than $10,000, which is the minimum to file an Offer in Compromise.
You may have hard assets (real property) but lack liquid assets (income) to pay your IRS tax debt. This could be a reason to seek Currently not Collectible status. Being Currently not Collectible can provide "breathing room" while an Offer in Compromise is being prepared.
Understanding Currently Not Collectible Status
Essentially, Currently not Collectible (CNC) status provides you with protection from the IRS enforcement and other collection actions against your assets (tax lien, levies, seizures, wage garnishment, etc.). Being placed into CNC status does not mean that your IRS debt is settled. To settle your tax debt, you need to submit an Offer in Compromise. CNC does not mean that you do not have to ever pay the money you owe the IRS, or that the IRS will not assess penalties (like late fees) against you during the time you remain in CNC.
Section 188.8.131.52. of IRS Code explains the different situations in which an account may be moved to CNC status. For example, CNC status may be granted when:
Collection of taxes would create “a hardship for taxpayers” that leaves them unable to meet basic cost of living expenses;
When an individual dies and there is no collection potential from their estate;
When a taxpayer (or their assets) cannot be located; or
When a taxpayer cannot be contacted, even though location is known.
When you are in Currently not Collectible status, the IRS will leave you alone for approximately 12 to 18 months. During this period of time, the Statute of Limitations will continue to run out. CNC can be renewed. Every month on Currently not Collectible status is one less month that the IRS can collect the tax debt. Yes, there will be a federal tax lien filed but credit reporting services have stopped posting tax liens. It is quite possible that the IRS debt will just go away by running out the collection clock.
How to Get CNC Status
As stated above, CNC status can be an essential part of financial health for those who have a tax liability but are unable to pay it. An attorney can help to guide you through the steps of applying for CNC status, which include proving that you do not have any assets that would provide you with the ability to pay your tax burden. To prove this, you must fill out and file a number of forms, including Form 433-A. This is a highly comprehensive form that should be filled out with a knowledgeable tax attorney. You will also need to include a copy of your tax return, proof of living expenses (including healthcare and transportation), and more.
Experienced Tax Professionals Are Ready to Help
Our tax professionals and IRS problem-solvers serve clients nationwide but often work with clients in Daytona Beach, Orlando, Jacksonville, Tampa, Key West, and Miami. When you call us for your free case consultation, we will do everything we can to make sure that your tax issue is fully explained to you and that you understand what your tax relief options are. From there, we will work hard on your behalf to procure the best resolution possible.
To learn more about IRS CNC status, contact Flat Fee Tax Relief today. We are ready to work for you!