​If paying both basic living expenses and IRS tax liability is causing you economic hardship, you may qualify for being granted tax relief from IRS by obtaining Currently Not Collectible Status.

What is Currently Not Collectible Status?

If the IRS places your tax account into Currently Not Collectible status, the IRS will no longer be able to enforce collection activities against you while under this status. You will not receive threatening collection notices regarding your taxes, nor will your case escalate to other enhanced collection activities such as bank levies, wage garnishments, or property foreclosures. You will be able to regroup!

How Do You Obtain IRS Currently Not Collectible Status?

To obtain IRS Currently Not Collectible status, you need to demonstrate to the IRS that you cannot simultaneously pay your tax debt and living expenses without causing severe economic hardship. You must follow an IRS criterion to prove this, and if successful, the IRS will give you a reprieve from having to pay your tax bill.

The IRS generally requires you to complete IRS Form 433-F – Collection Information Statement to establish your financial hardship position. The form requires listing your income, expenses, assets, and liabilities. Depending on your situation, the IRS may require a more in-depth listing of your financial information and direct you to complete Form 433-A (Collection Information Statement for Wage Earners and Self-Employed Individuals). Additional support documentation must be turned in with either form used for IRS verification purposes.

How Will the IRS Determine If I am Eligible for Currently Not Collectible (CNC) Status?

While you must demonstrate that you are unable to afford to pay both living expenses and taxes, you must also do so within specific IRS standards. The IRS has a National Standards criterion of amounts, established for five necessary expenses: food, housekeeping supplies, apparel and services, personal care products and services, and miscellaneous and a Local Standards housing and utilities, which is based on which locality you reside in. The IRS combines these amounts to determine the amount of allowable living expenses. If your expenses exceed the IRS allowable amounts, typically, the excess is not counted for CNC purposes.

For example, let’s say your location standard for housing and utilities is $2,050, and your actual expenditures are $2,450; the additional $400 over the allowable amount would generally not be considered by the IRS when determining your total monthly living expenses.

However, there may be exceptional circumstances, such as specific healthcare expenditures, that the IRS may consider an allowable expense over the standard amount. You will need to provide adequate documentation to substantiate your position. In situations like this, getting IRS representation from a tax lawyer-CPA who thoroughly understands the IRS allowable living expense standards and has experience advocating similar cases with the IRS may be prudent. Professional tax help could help you afford the highest allowable expense amounts or even help you qualify.

The IRS Requires Compliance When Considering Currently Non-Collectible Status Eligibility

Before the IRS places your account in CNC status, it may ask you to file any past-due tax returns.

The IRS may also review your tax withholding to ensure you have enough withheld from your employer to cover current and future taxes due. If not deemed enough, the IRS may make you change your withholding amounts accordingly to approve you for CNC.

If you have self-employment income, the IRS will want to ensure you make correct estimated payments and could even make you submit additional amounts before granting CNC approval.

What Happens While I Am in CNC Status?

While your account is in CNC status, the IRS generally won’t try to collect from you. Once the IRS places your tax debt into CNC status:

• CNC Status does not prevent the IRS from assessing interest and penalties to your account.
• The IRS may withhold and apply your tax refunds to your tax balance.
• The IRS may file a Notice of Federal Tax Lien (NFTL) when your account is placed in CNC status. Filing an NFTL can inhibit your ability to sell or borrow property or other assets.
• The IRS will not place a levy on your assets or garnish your income.
• The IRS can contact the State Department to revoke your passport if the balance is over $52,000.
• You can make voluntary tax payments on your account.

Typically, the IRS will review your financial situation annually. If your financial situation improves, the IRS may take you out of CNC status. You may be eligible for other IRS tax debt relief options if that happens. It may be prudent to have a tax attorney-CPA assist in ensuring all options are considered.

What Should I Do If the IRS Rejects My CNC Application?

If your CNC Status request is denied, you have the right to:

• Request a meeting with the IRS Collection Manager
• File an appeal:

If you are considering appealing your decision, hiring a tax attorney-CPA who could help you present the best case and ensure all of your options are considered while making the best case on your behalf would be prudent.

Does Being in CNC Status Halt the Collection Statute Expiration Date?

In addition to not having to pay a tax debt while your account is in CNC status, the Collection Statue Expiration Date (CSED) continues to toll during this period. The CSED is where the IRS has ten years to collect a tax from either the later of the tax assessment date or the filing due date. Once this date comes about, the IRS can no longer collect the tax. The tax is no longer due if your tax account is placed in the CNC status and the CSED occurs during this period.

Other tax relief options such as Installment Plans, Offer in Compromise, and Bankruptcy all have tolling periods, resulting in the CSED being extended for additional time.

If the IRS ever requests for you to sign a waiver to extend the CSED, you may want to consult with a tax professional first.

Seek Help Applying for IRS Currently Not Collectible Status

IRS collection activities could cause you financial hardship if you cannot pay the taxes owed. You may have the option to have collections halted if you are eligible to apply for IRS CNC status. To learn whether CNC or another tax relief option would work best for your relief from unpaid IRS taxes, contact tax attorney CPA EA Will Harmon today by calling 772-418-0949 or completing the online contact form.

Tax Attorney-CPA-IRS EA Will Harmon has extensive experience helping taxpayers who, unfortunately, cannot afford to pay their IRS tax debt to negotiate optimal tax relief plans with the IRS. He can help you get the best outcome possible for your situation.

Struggling to pay your taxes? Can’t afford to make ends meet? Will Harmon, ESQ, CPA, IRS EA, can help you apply for hardship status with the IRS. To learn more, contact Harmon Tax Resolution, LLC today.

How to Apply for Uncollectible Status

If you can prove that you cannot pay your tax liability and living expenses, you may be eligible for tax relief through the IRS’s Currently Uncollectible Status option. If approved, to avoid causing severe economic hardship, the IRS will cease making you pay your tax bill. The IRS tax payment reprieve will continue if your financial situation remains the same.

The IRS requires completing Form 433-F (Collection Information Statement) to establish your financial hardship. Form 433-F is used to obtain current financial information necessary for determining how a wage earner or self-employed individual can satisfy an outstanding tax liability. This form enables the IRS to ascertain your financial hardship position by reviewing all the assets, liabilities, income, and expenses, which are listed in-depth on the form.

Often the IRS will also request that you fill out IRS Form 433-A (individuals) or IRS Form 433-B (Businesses). The 433-A or B is a collection information statement. You need to be able to provide supporting documentation for the information listed within this form.

IRS Uses Certain Financial Criteria to Determine If Your Situation Warrants Uncollectible Status

Sadly, many have financial obligations for items and amounts that fall outside the range or expense type the IRS considers acceptable for determining eligibility for some of its tax relief programs.

The IRS uses national and local standards to determine living expense caps based on household size. These standards cover food, housing, transportation, healthcare, and other necessities. Any expenditures listed over the allowable standards are generally not accepted unless they are essential for someone’s welfare. For example, there may be an amount over the allowable due to a medical condition which the IRS may include. Ensuring one maximizes their position is where having a tax attorney-CPA comes in. They have lots of experience in advocating on a client’s behalf with the IRS and ensuring all information coincides with the IRS rules enabling you to get the largest deductions. Having a dually licensed attorney is beneficial in cases like this. You get an attorney’s capability to advocate within the allowable legal framework and the financial expertise of a CPA to ensure accurate, correct, and complete financial positioning. Will Harmon from Harmon Tax Resolution, LLC is a multi-licensed Florida Attorney-CPA-IRS Enrolled Agent. Call him for a free consultation to see how your situation may qualify for Current Non-Collectible Status.

Must Establish Current Tax Compliance with IRS for Currently Not Collectible Status Consideration

The IRS will want to verify that you have taken proper action for current and future tax compliance before the IRS will place your tax account into Currently Not Collectible (CNC) status.

For employer withholdings, it will need to be demonstrated that you have an appropriate amount withheld for your level of earnings. You may have to change this for IRS to approve your CNC status. While under CNC status, you will have to maintain a level of withholdings to keep you from owing taxes.

If self-employment earnings are the leading cause for your tax liability, the IRS may have you submit a year’s worth of estimated quarterly tax payments before it is willing to grant you CNC status. While under CNC status, you will have to make timely and appropriate quarterly estimated payments.

While You Are in CNC status, here is What to Expect

If your financial situation remains to where it would be a hardship for you to pay living expenditures and also the tax debt, the IRS will continue to grant CNC status to your situation. The IRS evaluates your financial situation usually every two years.

Getting CNC prevents you from making payments on the past due tax balance. However, it does not stop interest and penalties associated with this past-due tax balance from accruing. Payments are not required on these amounts unless you come out of CNC status.

If you are due any tax refunds, the IRS will hold onto and apply them toward your tax debt. An IRS stipulation of CNC status requires you to avoid sustaining additional tax debt resulting from underpayment of employment tax withholdings or estimated quarterly payments. Having a tax professional help you with this could be beneficial.

Being in CNC status does not prohibit the IRS from filing a Notice of Federal Tax Lien against your assets. For more information about IRS Tax Liens, please refer to this blog. Even though Tax Liens could be filed, the IRS usually will not invoke levy seizures of your assets. Although the IRS may contact the State Department to have your passport revoked, the IRS generally does not for those under CNC status.

How Long Does CNC status Last

The IRS uses a Collection Statute Expiration Date (CSED), the amount of time the IRS must legally collect a tax balance. The CSED is usually ten years from when the IRS assessed the tax. The CNC lasts if the CSED is in place. There could be events that extend the CSED, such as an Offer In Compromise or Bankruptcy filing. These types of events toll the statute while the IRS is considering them. The IRS will also add some time to the CSED once a determination has been made. It is essential to know precisely what this is. Sometimes, the IRS will solicit the taxpayer via a waiver to extend the CSED. Speaking to a tax attorney before agreeing to do that is a good idea.

What Happens When the IRS Rejects Your CNC Application

You can appeal the CNC decision and any collection actions taken against you by the IRS. Having a tax attorney to help would be ideal.

Pros and Cons of IRS Currently Not Collectible Status

Before deciding to pursue this form of tax relief, it is essential to understand the pros and cons. One of the pros is that you can obtain immediate tax relief without paying the tax debt. This includes a stoppage of IRS levy activities such as wage garnishment or seizing your bank account funds until the tax debt is paid. However, on the con side, IRS can still implement federal tax liens on your home or property in addition to future acquisition while the IRS tax lien is in effect. While an IRS tax lien is in place on your property, and if you were to sell it, available proceeds from the sale will go towards paying off back taxes, interest, and penalties. In addition, CNC status does not prohibit the IRS from accruing interest and penalties toward the tax debt. These can add up substantially. For more information about liens, please refer to this blog, “Important Information About IRS Tax Liens.”

Another CNC con is that CNC may not be a permanent solution to your tax situation. The IRS typically has ten years to collect the tax once assessed. The IRS will continually observe your financial situation and secure reports from external parties such as financial institutions, vendors, and employers. You will no longer be eligible for CNC if the IRS determines your income has increased. If you are on a fixed income (Social Security, Disability, Pension, etc.), this financial observation will not apply. If the IRS halts your CNC status, collections will continue, which could involve aggressive tactics, such as levies and garnishments to be used to pay the tax debt.

Conversely, another Pro for CNC is that while you are in CNC status, the 10-year statute of limitations on collections continues to run. This running of the collection statute means that the IRS has less time to collect from you even if your situation improves, resulting in revoking your CNC status. In addition, because the collection statute is lower, you may now be eligible for other tax resolution remedies. If your status remains constant while in CNC, you will run out the IRS 10-year Collection Expiration Date statute, resulting in the tax debt getting wiped off completely.

Seek Professional Assistance When Applying for Currently Not Collectible Status

If you are at a financial breaking point where you can’t pay your living cost and tax debt, it may be worthwhile to investigate whether CNC status is ideal for you. Since the IRS can employ aggressive collection tactics, which will only significantly worsen the situation, a tax resolution action must be needed. A seasoned, experienced tax professional such as a multi-licensed Tax attorney-CPA-IR EA, Will Harmon of Harmon Tax Resolution, LLC, can guide you through every step to ensure you get the best outcome for your situation. The initial consultation is free. You can take control of your situation. Call today so that you can sleep well tonight!

Certain taxpayers are surprised that they owe additional income taxes yearly even though their employer withholds taxes from their weekly paycheck. Having an outstanding tax debt is not as uncommon as you think, and there are many reasons it could happen. About 24% of all Americans owe back taxes. If you’re among them, you know how nerve-racking it can be, whatever the amount.

Although sometimes it may seem that way, the Internal Revenue Service (“IRS”) is not out to maliciously target you. Since some of the tax code is confusing, it is easy to make mistakes; even the IRS makes them. It is essential to recognize this to remain calm when dealing with this situation.

Just getting a notice from the IRS can be unnerving. If you don’t agree with the IRS’s assessment of a tax owed or don’t understand the IRS’s position, the best approach is to write out your points and questions methodically. This purpose is to put your information and questions into a concise format to allow a conducive discussion with the IRS.

If you are responding in writing, include your name, social security or tax ID, and the notice’s reference number, which you can find in the upper right-hand corner of the first page of the notice.

Please remember that the goal is to resolve the issue quickly; how you engage the IRS personnel could assist or impair this. Your issue will be addressed by an individual and not a faceless careless entity. Being polite and cordial will make your issue more likely to be addressed and resolved.

If your situation entails owing an undisputed tax debt to the IRS and you cannot pay it, you have options. Ignoring the debt is never viable since the tax debt will not go away and will increase with additional penalties and interest. Eventually, your situation will be compounded by the IRS taking a more aggressive approach involving the issuance of liens followed by levies and or garnishments. You could even have your passport taken from you.

Dealing with the IRS in the same manner as described earlier to devise a payment arrangement known as an installment plan is a viable option. The IRS has several types of installment plans, each of which is deviated based on assessed tax amounts owed. The information-gathering requirement for each type varies as well.

Suppose you’re in a financial predicament where you cannot pay basic living expenses and the IRS tax debt. In that case, you may qualify for other options, such as being placed into a Currently Not Collectible Status (“CNC”), where the IRS will halt collection activities. In contrast, your financial situation remains as such. Under this plan, the ten-year Collection Statute Expiration Date (“CSED”) continues to run, and once you reach the CSED for an assessed tax, the IRS can no longer collect the debt, and it gets removed from collections.

Other options may include qualifying for a form of an Offer In Compromise (“OIC”), where there is a settlement agreement to pay the debt for less than the original amount. OICs are considered by the IRS when tax liability or collectability of the debt is in doubt. In other words, if they’re not sure about how much you owe or if they believe you might not ever pay, the IRS could settle for a type of OIC.

In addition, you may qualify for a Partial Payment Installment Agreement (“PPIA”) which allows for a lesser payment. This is like OIC consideration, where one cannot pay the entire tax balance owed before the CSED. In some cases, this is a better option and an OIC.

Regardless of the plan, you must comply with your tax return filings. Otherwise, you will be ineligible. Generally, six years is how far back you have to comply with filing your tax returns. In some cases, the IRS could require beyond that.

Most installment plans where full tax debt payment is to occur can be set up with the IRS without too much headache. However, if you are dealing with an OIC, PPIA, or CNC, it is highly recommended that you seek the help of a qualified tax resolution firm like Harmon Tax Resolution, LLC. You will deal directly with a multi-licensed Tax Attorney-CPA-IRS EA who will ensure your case is adequately represented. In addition, any required tax compliance work can be addressed as well.

Do you owe back taxes? Are you doing anything to fix the problem? You can have a free consultation directly with a multi-licensed Tax Attorney-CPA-IRS EA. Not taking action doesn’t solve the problem make the call today and sleep well tonight.

There are several options to consider when one has a tax balance owed to the IRS. One can seek an Offer In Compromise; one could utilize Installment Plan options, or most likely as a last resort, to declare a form of bankruptcy. In these options, the tax debt is reduced. However, there is an option that does not reduce the tax debt but provides relief. This option comes when one applies for Currently Not Collectible (“CNC”) – based on a hardship status.

When you cannot afford to pay both your tax debts and your basic living expenses, you may be eligible for what qualifies under the IRS CNC status. If the IRS grants you this status, the IRS will refrain from all collection activities of tax debt, including refraining from garnishing, levying, or placing liens on your property. Once it is established that you can meet your living expenses and pay your tax debts, the IRS will then pursue/resume its collections activities. During this time, they will not solicit payments from you, garnish your wages, or place liens on your property. The IRS will, however, continue to apply penalties and interest to your tax debt. In addition, while there is a balance owed, any future tax refunds will be applied toward this tax debt.

There are a couple of requirements to be considered by the IRS for CNC status. First, you will have to complete a financial analysis to show your financial difficulties to the IRS. A tax attorney, especially with a CPA background, could come in handy to help appropriately portray your financial position. Second, you need to file any delinquent or missing tax returns. Going forward, the IRS will use the future filed returns to evaluate your financial condition for continued CNC status.

The primary purpose of CNC status is to help people deal with financial hardship and not force them into having to use bankruptcy as the only way out. If one needs to use this status, there is no shame to it since it’s meant to be a stop-gap to help people dealing with severe financial needs get back on solid footing. However, it should not be used as a loophole to avoid paying taxes, nor is it for those living well off.

Feel free to contact Harmon Tax Resolution, LLC, if you have any questions. Call today; sleep well tonight.

To qualify for Currently Not Collectible (“CNC”) status, one must prove that they cannot pay any portion of the taxes owed. In addition to showing earnings are only enough to cover allowable living costs, one must demonstrate a complete lack of resource availability from borrowing, whether from a bank, credit card, or any associate’s lending funds.

The proof of financial hardship has to be firmly established by the taxpayer. The IRS will require you to show that you do not have assets, income, or borrowing capabilities to pay the taxes due. An IRS financial report format known as the 433-F is where one details these items. Backup support for what is listed is required. A tax attorney-CPA’s professional help to construct and advocate with the IRS could be beneficial in ensuring it is done most accurately and correctly.

Obtaining CNS status will stop all IRS collection efforts towards the tax debt, allowing you the ability to keep afloat. However, during this CNC status, you must make to file your taxes and keep them current; otherwise, the IRS will disallow the CNC status to continue.

In addition to getting financial relief, the 10-year collection statute of limitations on the assessed uncollected taxes continues to run. Once the time statute expires, the tax debt is released permanently. In many cases, while in CNC status, taxpayers have had some if not all of their tax debts removed due to state of limitations expiring.

CNC status can have several benefits. If you have questions regarding CNC qualifications or any other possible tax resolution solutions, please get in touch with us at your convenience. At Harmon Tax Resolution, LLC, your situation will be appropriately addressed by a Tax Attorney-CPA-IRS EA. The initial consultation is free. Call today; sleep well tonight.