Currently Not Collectible Status
When taxpayers owe back taxes and legitimately cannot afford to pay the IRS, there is a solution – it’s called the Currently Not Collectible Status or CNC status. It’s a temporary status, but it can be a life saver. It’s also the next best thing to an Offer In Compromise, and it has a much higher approval rate.
The IRS may not cause a financial hardship, in the process of collecting your back taxes. However, when tax problems are being ignored and requests for information is not received in a timely fashion, the IRS’s actions may cause financial hardship – this is why communication is key.
When the IRS recognizes that you are unable to afford to pay your tax debt, they will stop wage and bank levies and put all collections on hold; however, they will not stop the countdown on the collection statute expiration date. Therefore, if over the collection statute period, you are never able to afford to pay your back taxes, the balance due will expire and become uncollectible, giving you a clean slate.
While you are in the CNC status, the IRS will continue to levy your federal and state tax refunds. The IRS will also issue a lien to protect their interest and they will reassess your hardship status periodically.
The financial hardship status has allowed many of our clients to regain their financial footing and, in some cases, drastically reduce their tax debt.
Our approach to tax problem resolution is always to work within the boundaries of the law, while prioritizing your best interest. As a part of our analysis and advisory process, we will help you determine if you qualify for the financial hardship status, implement the resolution as applicable and secure levy releases currently in place.
If we find that an Offer In Compromise would be a better fit, opposed to the CNC status, we will also work with you to secure a settlement instead. – CLICK HERE to learn about our Offer In Compromise solution.