IRS Currently Non Collectible
Understanding the IRS CNC Status: When you can’t afford to pay your tax debt.
Settle your IRS Tax Problems & live your best life
IRS Currently Not Collectible (CNC) Status: When you can’t afford to pay your IRS Back taxes
The IRS CNC Status or Currently Non Collectible Status is a back-end tax debt settlement program where the IRS collections case is closed & you are not required to make any payments to the IRS because of financial hardship.
IRS CNC Program Highlights:
Your current finances make it difficult to pay your bills, including your IRS tax debt
Currently Not Collectible (CNC) status means the IRS closes your collections case
To qualify for CNC status, you need to demonstrate that paying taxes would create financial hardship.
When you get your CNC approved, the IRS DOES NOT extend the collection statute date!
Dealing with IRS Tax debt is extremely difficult, as the Letters pile up, along with the increasing threats of IRS Federal Levies & garnishments. The IRS CNC Program offers Tax debt relief as the IRS halts collections the moment you request financial hardship through the Currently Non Collectible Program
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What is Currently Not Collectible (CNC) Status?
The IRS CNC status means that the IRS has determined you are unable to pay your tax debt due to your current financial situation. When your account is placed in CNC status, the IRS temporarily halts collection activities, such as levies and garnishments. However, it’s important to note that interest and penalties on your unpaid taxes will continue to accrue during this period.
When the IRS approves you for the uncollectible status with tax debt, you are known to be on Status 53 with the IRS.
To qualify for the IRS CNC status, you must meet specific financial criteria:
Income: Your current Net Disposable income must be insufficient to cover both your basic living expenses and your tax debt. Your income included in the Gross Monthly is from all sources whether it its taxable income or not.
This includes wages, unemployment benefits, social security benefits, retirement distributions, rental real real estate and other sources of income.
How to Qualify for IRS CNC Status
Assets: You should not own substantial assets that could be liquidated to pay off your tax debt. The IRS will consider the value of your property, savings, and other investments.If you have equity in Assets, and are not able to liquidate, you may have to apply for an loan against the equity. Should the loan be denied, you may have to supply the the application & loan denial letter.
Expenses: Your necessary living expenses, such as housing, utilities, food, and transportation, must exceed your income. Other expenses include Current Income taxes, Delinquent State Income Taxes, Student Loan Repayment, Court orders, Child Support Payments & other expenses deemed necessary to meet your living needs. The IRS uses national and local standards to determine what constitutes reasonable living expenses.
Currently Not Collectible Impact on the 10 Year Rule or the Collection Statute Expiration Date.
A key factor on all IRS Tax Debt cases is the 10 Year rule of collections known as the Collections Statute Expiration Date or CSED for Short. The IRS has ten years from the date of assessment to collect your tax debt. If you owe for multiple years, then each year has its own CSED Date of expiration.
At the end of the 10 years or the Collection Statute, the IRS will write off your tax debt to $0 or essentially forgiven.
IRS Non Collectible Status: Beyond Financial Hardship
While financial hardship is the most common reason for the IRS approving the CNC status, there are other circumstances where the IRS may grant it. For instance, if pursuing the debt would place you in severe financial distress or if the your assets are insufficient to cover the tax debt, the CNC status may be considered. Additionally, the IRS may place an account in CNC status upon your death if you have no significant estate or if you received a diagnosis of terminal illness.
IRS Non Collectible Debt and Your Financial Health
Having your IRS tax debt classified as non-collectible or IRS Hardship can provide some much needed relief, but it's essential to understand its impact on your overall financial health. While in CNC status, interest and penalties on your debt continue to accrue. If you file future tax returns & are due a refund, those refunds will be applied to the balance due. Therefore, it's beneficial to regularly review your financial situation and evaluate if a long-term solution, such as an Offer in Compromise or installment agreement, would be better to address your tax liability. Of Course, you must consider all factors to include the Collection Statute Expiration Date
How to File Currently Not Collectible with the IRS
Requesting the IRS CNC depends on the assigned IRS Collections Department. Filing for CNC status involves completing Form 433-F if your case is assigned to ACS Collections. If you case is assigned to field collections, then the 433A form must be completed and submitted to the IRS Revenue Officer.
Which IRS Collections Department is assigned to your Case?
IRS ACS Collections
IRS Special Compliance Dept
IRS Field Collections: Revenue Officer Assigned
In addition to the IRS Forms, you have to provide supporting financial documents. This documentation can include bank statements, pay stubs, and proof of monthly expenses. The goal is to demonstrate to the IRS that your income is insufficient to cover both your basic living expenses and your tax debt. Once the form and documentation are submitted, the IRS will review your case and make a determination.
CNC Tax Service: Should I Hire a tax attorney or Get Professional Help
Dealing with the IRS involves many steps, including review of the root cause of tax problems, getting into tax compliance, tax planning to avoid further troubles. Navigating the CNC approval process can be complex and overwhelming at times. You do not want to choose the wrong tax firm, as these firms that advertise are ran by commissioned salespeople. Seeking advice from a qualified tax professional, Such As Sergio Melendez, JD EA with Semper Tax Relief might be beneficial. Mr Melendez has the experience with Tax Settlements such as the CNC tax service & can help you with your IRS tax debt case. His expertise can increase your chances of being granted CNC status and provide peace of mind throughout the process.
How long will I be in the IRS Hardship program?
The average time you are in the CNC program is approximate 3-4 years. It varies because of your income status may change & the IRS may review your situation. In addition, you might only have a short time until the IRS writes off your balance because of the CSED dates, and your balance may go down to $0 while you are actively on the Financial Hardship Status.
Will the IRS file Federal Tax Liens when I apply for the CNC tax program?
The IRS usually files a federal tax lien in the county where you live, when the overall tax debt owed is over $50,000. However, the IRS may also file federal tax liens when you get approved for the CNC Status even if your tax debt is below the $50,000 owed.
IRS Currently Non Collectible Status FAQs
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The "Currently Not Collectible" (CNC) status is when the IRS has approved you for financial hardship status, thus closing out the collections case against you. You are uncollectible for repayment on your IRS Tax Debt, meaning you are unable to pay your tax debt due to financial hardship. When a you are placed in CNC status, it means the IRS has decided to halt collection activities like levies, garnishments, or the seizure of assets because such actions would create an undue financial burden on the taxpayer, essentially leaving them unable to meet basic living expenses.
Key Points Regarding CNC Status and Statute of Limitations:
Currently Not Collectible Status: This designation relieves taxpayers from the stress of immediate tax debt payment demands. Due to current financial constraints, it acknowledges that collecting the debt is not feasible without causing significant hardship to the taxpayer.
Statute of Limitations: Importantly, being granted CNC status does not affect the statute of limitations on tax debts. The IRS typically has 10 years to collect tax debts, and this countdown doesn't pause while an account is in CNC status. This means that if the taxpayer's financial situation improves significantly before the statute of limitations expires, the IRS may resume collection efforts to recover the unpaid taxes.
In summary, obtaining CNC status can offer critical financial relief to those struggling to meet their tax obligations due to hardship. However, taxpayers must understand that this is a temporary solution and does not erase their tax debts or halt the accrual of interest and penalties. Furthermore, the currently not collectible status continues the statute of limitations on tax debts, which continues to run even while collections are paused.