Currently Not Collectible Status
Taxpayers suffering from financial hardships often have federal tax debts that they are unable to pay. One possible solution is Currently Not Collectible (CNC) Status. This status is available for both individual and business taxes due. Read more below to find out about the advantages and disadvantages
If you’d like to speak with a Charles Krengel, P.A. about CNC Status, call us at (800) 892-9631 or click here to contact us online!
A Possible Solution For Delinquent IRS Taxes
There are times when taxpayers have accumulated tax debt but are just barely able to pay their bills and have little equity in their assets. If a taxpayer cannot obtain sufficient funds for an offer in compromise, currently not collectible (CNC) status should be considered. If the IRS approves CNC status, taxpayers are able to continue with their daily lives without the fear of IRS levies and seizures.
Requirements to be considered as currently not collectible:
An IRS collection information statement must be completed. This collection statement must show that the taxpayer has no current ability to repay the delinquent taxes and has little equity in assets.- The taxpayer must be current with all tax filings and demonstrate an ability to stay current with future tax obligations.
- If a business owes payroll tax, a trust fund responsible person investigation must be completed.
- A federal tax lien will be filed on tax debts of $10,000 or more unless there are extenuating circumstances.
Advantages of currently not collectible status:
- The IRS agrees not pursue collection of the debt which will give you time to stabilize your financial condition.
- Any outstanding levies will be released.
- CNC status may give you the needed time to have your tax debts discharged in a bankruptcy or thru an offer in compromise.
- The 10 year statute of limitations for collections could expire while you are in CNC status, which could result in your tax debt being eliminated.
Disadvantages of currently not collectible status:
- Interest and penalties continue to accrue on the IRS debt.
- According to the Internal Revenue Manual, businesses considered CNC have a mandatory review every 18-24 months to reevaluate their financial condition. In practice, the IRS often overlooks this “mandatory review”.
- If an individual in CNC status has an increase in income above a predetermined amount established by the IRS, an updated financial review will be required.
If you’d like to speak with a Charles Krengel, P.A. about CNC Status, call us at (800) 892-9631 or click here to contact us online!
Contact Charles Krengel, P.A.
As you can see, currently not collectible status can be an effective tool to relieve the pressure of IRS collections. If you have any questions regarding CNC status or other methods to deal with IRS collections, contact Charles Krengel, CPA.
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