Law Offices of Maryam M. Golbarg, P.C.
Your Tax Relief Attorney
Tax Solutions
Currently Not Collectible Status (Hardship)
There are times that you can’t pay your IRS tax liability to the IRS due to your current financial situation. The IRS may agree to deem your account temporarily uncollectible (Currently Not Collectible) if you can’t pay both your taxes and your basic living expenses. Situations that may warrant a CNC status include, but are not limited to: economic hardship, bankruptcy, being unemployed, old age, and poor health.
A Temporary Solution, but ...
A Currently Not Collectible (CNC) status is a temporary solution, because the IRS may resume attempting to collect the tax balances if your financial situation improves. However, if the collection Statute Expiration Date (CSED) — The IRS has up to ten years from the date the tax liability were assessed — expires while your account is in CNC status, your tax debts will be permanently written off. In other words, as long as you remain compliant and your income and expenses remain relatively unchanged, you can remain in the CNC status until the CSED expires.
There are times that you can’t pay your IRS tax liability to the IRS due to your current financial situation. The IRS may agree to deem your account temporarily uncollectible (Currently Not Collectible) if you can’t pay both your taxes and your basic living expenses. Situations that may warrant a CNC status include, but are not limited to: economic hardship, bankruptcy, being unemployed, old age, and poor health.
A Temporary Solution, but ...
A Currently Not Collectible (CNC) status is a temporary solution, because the IRS may resume attempting to collect the tax balances if your financial situation improves. However, if the collection Statute Expiration Date (CSED) — The IRS has up to ten years from the date the tax liability were assessed — expires while your account is in CNC status, your tax debts will be permanently written off. In other words, as long as you remain compliant and your income and expenses remain relatively unchanged, you can remain in the CNC status until the CSED expires.
If you believe that your financial situation is not temporary, and it may not improve, you may consider other possible resolution options such as an Offer In Compromise or a Partial Payment Installment Agreement. Call us to evaluate your resolution options.
What to Expect if the IRS Places your account in CNC status:
- The IRS generally won’t collect from you; for example, it won’t levy your assets and income unless later federal tax liability arise to remove you from uncollectible status;
- The IRS will still add penalties and interest to your account;
- The IRS may keep your tax refunds and apply them to your tax debt;
- The IRS may find a Notice of Federal Tax Lien (NFTL). The filing of an NFTL can affect your credit rating and your ability to sell property or other assets;
- The IRS may contact you to update your financial information to be sure your ability to pay hasn’t changed;
- You’ll also continue to receive an annual bill from the IRS.
What do you need to qualify for a CNC?
- You may need to file any past due tax returns;
- You need to provide financial information and supporting documents to show your income and expenses and whether you can sell any assets or get a loan;
- You are required to continue to make your Estimated Tax Payments and Federal Tax Deposits on time.
We can determine if being deemed uncollectible is an appropriate option for you and explain the pros and cons of being placed in CNC status. We have successfully represented the taxpayers before the IRS and obtained CNC status for them, if appropriate. Call us now to schedule an appointment and find out if CNC status is the right option for you.
