The IRS has a broad range of collection abilities if you have not paid your taxes due. Collections, especially if you were not aware you owed taxes at all, can be a severe drain on your finances. In some instances, you may not be financially able to pay the tax obligation at all based on your current income and your regular household expenses. The IRS can designate your account as being “Currently Not Collectible” and will discontinue collection efforts against you temporarily.
Packey Law Corporation has extensive experience with various tax resolution methods, including requesting “Currently Not Collectible” (CNC) status. This process can be confusing and frustrating, and going up against the IRS alone may not be a good idea. Our firm can help if you feel like you are out of options.
What is CNC Status?
If the IRS determines that your account is Currently Not Collectible, it will not engage in collection efforts against you. It assumes that these efforts would be fruitless because you do not have any money above and beyond what you need to cover your regular living expenses.
CNC status does not resolve the underlying tax issue; it only suspends the IRS’s collection efforts. You will still owe the taxes if you do not dispute them or pay the amounted due. The IRS will still also assess penalties and interest despite being classified as CNC. For this reason, if you can pay anything at all, it is often in your best interest to cut down on the interest and penalties over time. The IRS can still file federal tax liens as well, but it will also release any wage garnishments or levies currently in place.
Once the IRS classifies your account as CNC, then the tax resolution professionals at Packey Law Corporation can work with you and the IRS to develop a payment arrangement or Offer in Compromise to actually resolve or work out your tax debt.
Obtaining Currently Not Collectible Status
In some situations, the IRS will automatically put you in CNC if they cannot locate you or your assets. However, it is never a good idea to deliberately hide from the IRS because such action can result in tax fraud allegations.
Instead, you should work with the IRS to provide financial information, including your assets, expenses, income, and any long-term debts that you owe. Packey Law Corporation can assist in the proper documentation to obtain a CNC Status.
Other Reasons You May Have CNC Status
While financial hardship is the most common reason that taxpayers are classified as CNC, there are other occasions where the IRS will make this classification. In those situations, you may not need to request CNC status because the IRS will do it on its own.
- The time to collect a tax debt has expired;
- A business is no longer engaging in business activities and has no assets;
- A corporation liquidated in bankruptcy, and there is no potential to collect taxes owed outside of bankruptcy;
- The person against whom the IRS is attempting to collect is deployed in a combat zone;
- Death of an individual and there is no possibility of collection from the estate.
If the IRS is hounding you and making it difficult to meet your monthly obligations, contact Packey Law Corporation to inquire whether a Currently Not Collectible status is in your best interest based upon your unique circumstances. In many cases, a CNC is a good temporary solution to prevent collection action against you. While your case is in CNC Status, Packey Law Corporation can then assist you in a long term solution such as an Offer in Compromise or Installment Agreement that agrees with your financial situation.