Understanding Currently Non-Collectible Status

Losing your job, getting a divorce and other sudden life changes can have a significant impact on your ability to pay your bills. Sometimes, you simply need time to get caught up before you are able to start paying off your debts.

 

If you have tax debt and are unable to make monthly payments, you can postpone payment by requesting that the IRS place your debts in "currently non-collectible" status. This will stop all actions by the IRS to collect on your tax debt, which might be just what you need to get your financial situation, your career and your life back on track.

At the Law Offices of Neil Crane, LLC, we have dealt with taxes and taxing authorities on a daily basis for the past 30 years. We understand the goals and guidelines of all types of taxing authorities, revenue officers and collection activities. Our experience and history of success over a broad range of tax problems allows us to evaluate your special circumstances against all the options available under all the laws and recent developments for taxpayer protection. Our lawyers will provide you with straightforward advice so you can utilize every defense and strategy available to help you with your tax debt issues, including installment plans, filing for bankruptcy and offers in compromise.

Get answers to your questions about currently non-collectible tax status. Contact our Connecticut attorneys online, or call us at 203-230-2233 or toll free at 888-249-3027 for a free initial consultation.

How Currently Non-Collectible Status Works

While your tax debt is given the status of "currently non-collectible," the IRS will not take action to enforce your tax debt. It is important to remember, however, that this does not make your debt go away or stop growing. Penalties, fees and interest will still build up over time, but there can be no collection actions, liens or levies placed against you.

Additionally, the IRS will review your status each year. If you are still unable to pay your tax debt, you will receive a statement that outlines the current debt you owe, including penalties and interest.

Levels of Proof and Benefits of Currently Non-Collectible Status

To qualify for currently non-collectible status, or "CNC" Status, the requesting taxpayer must prove that their monthly expenses exceed their monthly income. By proving that, the taxpayer's tax financial hardship is so severe that they would be unable to pay anything on the tax liability under an offer in compromise or an installment agreement.

Proof of financial hardship requires a complete understanding of what expenses are considered reasonable or "allowable expenses" as valid deductions against income that is recognizable and valid under the IRS guidelines and definitions. At the Law Offices of Neil Crane, we've utilized the IRS's table of allowable expenses in providing success for thousands of Connecticut clients seeking to prove IRS standards of inability to pay.

Collection Stops Under Currently Non-Collectible But Interest, Penalties and the Statute of Limitations Continues

  • Currently CNC status stops all collection activities, including levies and garnishments.
  • The declaration of CNC status allows the IRS a ten-year statute of limitations to continue to run and if the IRS does not collect the tax within that ten-year period, the tax debts are expired and extinguished.
  • During the CNC status, the IRS is required to send an annual statement of the tax amount still owing, but there is no bill during the period the taxpayer is declared under CNC Status.

CNC Documentation Requirements

In order to obtain CNC Status, the taxpayer needs to submit a Form 433-F, which is a complete statement of all financial information under oath to the IRS to determine your Reasonable Collection Potential. This is a complete and full disclosure that needs to be properly and carefully prepared, as it can and will be used for or against you.

  • Currently non-collectible status requires the taxpayer to periodically reprove their qualifications for CNC status. At the end of a period of normally 18-24 months, the taxpayer will need to show the IRS that their economic situation has not improved. Since economic betterment and improved financial circumstances is generally a goal of all taxpayers, CNC status needs to be carefully requested and utilized in the appropriate circumstance with a complete understanding of the present financial qualifications and the likely future qualification of each individual client. Full analysis, experience and attention to detail are the key elements of our ability to grant maximum taxpayer relief.
  • Proving to the IRS that you should be granted CNC status requires a full understanding of the IRS standards and a complete presentation of the financial details necessary to prove qualification for CNC eligibility. Proper analysis of truly recognized and allowable expenses is essential to assuring that monthly income does not exceed recognized monthly expenses.

Points to Remember for CNC Relief

CNC status is a temporary form of relief that stops collection but doesn't stop taxes from accruing interest or guarantee the reduction or elimination of taxes on a permanent basis.

Ideal CNC status often best suits those taxpayers under collection procedures but without excess cash flow from which to pay overdue taxes. It fits taxpayers who have permanently reduced income or fixed retirement income with or without assets, but with limited chance of improved income until the end of the ten-year statute of limitations when the IRS will close your case.

CNC status means no refunds. Taxpayers under CNC relief must continue to file tax returns each year. If you are due a refund under any year of eligibility under CNC protection, your refund will be taken and applied to the outstanding tax liability.

CNC status protects assets. Obtaining CNC status based upon a lack of present income can protect significant assets and equity from liens, levies or seizures while under CNC eligibility and allow the statute of limitations to continue to elapse.

Contact Our Norwalk Tax Relief Attorneys

Unpaid taxes can quickly become overwhelming. Act quickly to resolve your tax concerns before the IRS seeks to garnish your wages, seize your property or place a lien on your home.

Call our currently non-collectible tax attorneys in Connecticut at 203-230-2233 or toll free at 888-249-3027, or contact us online. From our offices in Hamden, Bridgeport, Ridgefield, Waterbury and Rocky Hill, we offer a free initial consultation to discuss your tax debt.

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