Although personal income tax season is officially over, unless of course you filed for an automatic six-month extension, some people are still in need of tax help. While many are checking their mailboxes and checking accounts for tax refunds, others are stressing out over how they will resolve their IRS debt. If this is your current situation, requesting the IRS place your account in Currently Not Collectible status may be an option you may want to explore.
What is Currently Not Collectible Status?
When the IRS determines you have a tax liability, they will proceed to collect your tax debt. You can opt for an installment plan agreement which will allow you to pay your debt over time. However, in some circumstances, even an installment plan may not be feasible. When you have an outstanding IRS debt, they may decide to levy your wages or any other government benefits you may receive. At this time, if you cannot afford to pay your tax debt, a request to place your account in Currently Not Collectible Status (IRS CNC) which may provide temporary relief and halt enforcement action.
When your account is approved for CNC, further collection action by the IRS will be postponed. Being placed in CNC suspends all collection activity and releases any levies.
It is important to note that CNC status is often a temporary solution. The IRS will periodically reevaluate your financial condition to determine if your tax debt is still uncollectible. But don’t let that scare you. If you are in a financial bind and owe the IRS, CNC is an option.
What Is Suitable for Currently Not Collectible Status?
Although economic hardship is the main reason for the IRS CNC, it is not the only cause. Here are some other reasons that are suitable for placing your tax account in CNC status.
- Expiration of the statutory period for collection
- Expiration of the statutory period for collection or suit initiated to reduce tax claim to judgment
- Inability to locate the taxpayer or assets
- Inability to contact a taxpayer although the address is known, but there are no means of enforcing collection
- Suspension of corporation business activities and no assets remaining
- A corporation liquidated in bankruptcy
- Death of an individual with no collection potential from an estate or no collection potential for estate taxes
If you fall under any of these situations, your account will have to be reviewed by the Collection Information Status (CIS).
How a Tax Professional Can Help You
Working with a tax expert takes the stress and emotion out of a difficult situation. A tax professional can help stop IRS enforcement action including stopping wage garnishment and other enforcement actions. When dealing with the IRS time is of the essence. You need to work quickly to resolve your tax issues.