Currently Not Collectible (CNC)
In some cases, a taxpayer has no ability to pay his or her tax debts. There simply is not enough money in the monthly budget. After submitting certain financial forms along with substantiating documents, and participating in robust negotiations, we are often able to assist the IRS in declaring a taxpayer’s account as “currently not collectible.” At that point, the IRS must cease all collection activity, including levies and garnishments.
How to Obtain Currently Not Collectible Status
To qualify for currently not collectible statutes, we must generally establish:
- That the taxpayer’s monthly income does not exceed his or her allowable expenses, so that there are no excess funds each month for the IRS to garnish;
- That the taxpayer does not have any assets or property worth levying; and
- The taxpayer’s financial condition is not expected to improve in the near future.
When to Seek CNC Status
Currently not collectible statutes is often the best approach in cases where an installment agreement or offer in compromise is not appropriate, and the statute of limitations for collecting the tax is about to expire.
What it Means to Be Currently Not Collectible
Interest and penalties continues to accrue on the outstanding balance of accounts placed in currently not collectible status. However, the 10-year statutory period during which the IRS can collect the taxes continues to run. If the statute of limitations for collecting the tax runs while the account is in currently not collectible status, the IRS is permanently barred from collecting the outstanding tax.
The taxpayer will be required to provide updated financial disclosures on an annual basis to remain in a currently not collectible status. Of course, if the taxpayer’s financial condition improves, the IRS can pull the file from currently not collectible status and return it to active collections. Any periods of currently not collectible status is indicated on the taxpayer’s tax transcript with the transaction code TC 530.
If you have been assessed substantial taxes that you cannot afford to pay, call the Business Law Group today, at (719) 355-8840, and let one of our experienced tax attorneys evaluate whether you are eligible for currently not collectible status.