Trying to pay off your tax liability probably isn’t always at the top of your list. You have your rent or mortgage, car payments, insurance, utilities and other living expenses that come first and trying to fit in a tax payment isn’t always possible. The IRS understands this and you may qualify to be placed in Currently Not Collectible (CNC) status. If your account gets placed in CNC status, the IRS won’t try to collect from you and they 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 levy, the IRS will then release it. 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.
How to Get into IRS Currently Not Collectible Status
If you are wanting to try and qualify for IRS CNC status there are a few things you need to do. 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.
Along with filing all your tax returns, you will also need to gather all your personal information such as income, expenses and any loans you currently owe on. The IRS or your tax attorney will use this 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. To show the IRS all this information, they may ask you to fill out a Form 433-A for you or a Form 433-B for your business. 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. You should make sure you have documentation to support all of your expenses you are claiming. 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.
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, there are several things you can do. You can request a conference with the IRS Collection Manager. This will give you the opportunity to go over why you were rejected and allow you to make a case for why you should qualify for CNC. You can also hire a CPA, IRS tax attorney, or an enrolled agent to represent you against the IRS. They can talk directly to the IRS and argue on your behalf on why the IRS should place you into CNC.
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 will not only help you get complaint with the IRS, but they will also help you decide which IRS resolution is best for you. Polston Tax helps 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 click below to schedule your free consultation.