What Is Currently Non-Collectible?
Currently Non-Collectible status is designated by the IRS for taxpayers facing financial hardship that prevents them from paying their taxes at present.
Is Currently Non-Collectible The Right Status For You?
Unlike other Fresh Start tax programs, Currently Non-Collectible (CNC) is not a program but rather a status. While CNC status does not erase tax debt, it stops collection activities such as bank levies, wage garnishments, tax liens, and intimidating IRS correspondence.
Having CNC status enables you to plan a tax relief strategy without interference from the IRS. It’s important to note that this status is temporary, so it’s crucial to be prepared to take action once it expires.
How Do You Qualify?
To be eligible for Currently Non-Collectible (CNC) status, you must first achieve IRS compliance by filing all required tax returns. Without compliance through filing, you cannot qualify for CNC or any other relief program under the IRS Fresh Start Initiative.
Once your tax filings are updated, you must demonstrate significant financial hardship that prevents you from paying your outstanding taxes. The IRS assesses various financial factors, such as wages, interest, dividends, distributions, income, and real estate, comparing these against the maximum allowable expenses for your area to determine if any funds remain to cover your tax debt.
If you present a compelling case, the IRS is obligated to grant you CNC status, which immediately stops all collection activities.
Can I Qualify On My Own?
While it’s possible to apply for Currently Non-Collectible (CNC) status independently, seeking advice from a tax relief professional is highly advisable. Qualifying for CNC status is intricate and necessitates presenting a compelling case to halt IRS collection actions.
Taxpayers who secure CNC status on their own may risk being prematurely removed from it due to misunderstandings of tax regulations or agreeing to terms that are disadvantageous. Once CNC status is revoked, the IRS typically resumes collection efforts, often employing the same aggressive tactics.
TaxRise recommends consulting with a tax professional before requesting CNC status from the IRS. Applying independently could result in agreeing to terms less favorable to the taxpayer.
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