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What Is Currently Not Collectible Status and How Do You Qualify for It?
Paying off your tax liability on top of your mortgage, car payment, insurance, utilities, and other living expenses can feel overwhelming. The IRS understands this and may consider you eligible for Currently Not Collectible (CNC) status.
When you owe taxes but have little or no income, CNC status may be a good option for you. If you qualify, you may be temporarily permitted to pay nothing and keep your assets. At Polston Tax, we can help you determine whether you qualify for Currently Not Collectible status and help you build your case to request this status with the IRS.
What Is Currently Not Collectible Status?
If your account gets placed in Currently Not Collectible (CNC) status, the IRS won’t try to collect from you and won’t levy any of your assets or income. Being placed into CNC will suspend all collection and enforcement activity, and if you already have a bank levy, the IRS will then release it. While this does not mean your debt disappears, it does mean the IRS acknowledges you cannot currently afford to repay it, and collection will be delayed. Eligibility requirements for CNC status include:
- Making less than $84,000 each year
- Being unemployed with no other source of income
- Reaching the end of your tax debt collection’s statute of limitations
- Receiving income only from unemployment, Social Security, or welfare benefits
- Having no money leftover after you pay your basic living expenses each month
While in CNC, the IRS will still assess any penalties and interest to your account and may even keep your refund to help pay back your tax liability. You can also make voluntary payments to the IRS, even if you are in CNC status. If you are concerned about your tax liability and your ability to pay it off, turn to us at Polston Tax. We have experience helping our clients determine whether they qualify for CNC status and supporting their case to the IRS.
How to Get into IRS Currently Non-Collectible Status
If you believe you may be eligible, you need to support your case. At Polston Tax, we can help. To qualify for IRS non-collectible status, you need to take a few steps, including:
- File your federal tax returns on time: First, you must file all and any federal tax returns from previous years that you are required to file. This also means you must keep filing your returns after you achieve IRS CNC status, even if you can’t pay the taxes owed. Filing your tax return on time helps you avoid late filing penalties and increasing your tax liability.
- Gather your income information: Along with filing all your tax returns, you will also need to gather all of your information regarding your income. The IRS considers different types of income when determining CNC status, such as wages, dividends, interest, distributions, Schedule F net profits and Schedule C net profits.
- Determine your expenses: The IRS will also assess your expenses to determine whether they meet the requirements. Gather information on your expenses and any loans you currently owe on. The IRS or your tax attorney will use your financial information to determine how much disposable income you have available each month. If you have a lot of disposable income available at the end of the month, it will be harder for you to negotiate CNC with the IRS.
- Fill out the necessary form: To show the IRS all this information, they may ask you to fill out Form 433-A, Form 433-B or Form 433-F. This is a Collection Information Statement that the IRS uses to gauge how much income and expenses you have each month. It’s important to know that just because you put an expense on the form doesn’t mean the IRS will accept it.
- Collect supporting documentation: You should ensure you have documentation to support all the expenses you claim. If you don’t, the IRS may ask for it, and trying to get the documentation after the fact can delay getting a resolution with the IRS.
By reaching out to a tax attorney at Polston Tax, we can help you through this process and ensure everything is handled correctly.
What to Do If the IRS Rejects Your Request for IRS Uncollectable Status
If the IRS thinks you can afford to make some sort of payment, they will reject your request for CNC. If you disagree and still don’t think you can make the necessary tax payments, you have a couple of options.
- Request a conference: You can request a conference with the IRS Collection Manager. This will allow you to go over why you were rejected and make a case for why you should qualify for CNC.
- Hire a tax attorney: You can also hire a CPA, IRS tax attorney or an enrolled agent to represent you against the IRS. Your tax professional can talk directly to the IRS and argue on your behalf on why the IRS should place you into CNC.
If you determine the right option for you is to hire a tax attorney, turn to Polston Tax. Our team can provide you with assistance and consulting. The IRS typically reviews your CNC status every two years, verifying that your financial situation is the same and you still require CNC status. We can help you navigate dealings with the IRS and support your case for CNC status.
Get Help From Polston Tax to Qualify for the CNC IRS Tax Program
When dealing with your tax liability, it’s best to be proactive. Since the IRS can garnish your bank account or wages, you should take action as soon as possible. During financial hardship, you may be eligible for Currently Not Collectible (CNC) status, which allows you to temporarily delay when you will repay your back taxes. If you need help deciding if CNC is right for you, or you aren’t sure how to start the process, Polston Tax can help!
Our team of IRS tax attorneys and IRS tax preparers can help you get compliant with the IRS and decide which IRS resolution is best for you. If you don’t qualify for CNC status, we may be able to help you negotiate an installment agreement or an offer in compromise (OIC) with the IRS. We help hundreds of people get resolutions with the IRS every year, and we can help you get yours too. Call us at 844-841-9857 or schedule your free consultation today.