Currently Not CollectibleThe IRS Currently Not Collectible Status, Grand Prairie Texas

You may be qualified to defer having your payment made to the IRS on past due income taxes if you are in tax debt and simply cannot pay. You must have little or no money left over each month after paying expenses which are essential, such as rent, utilities and groceries to qualify for a deferral. The IRS will place your account in the “Currently Not Collectible” (CNC) status and will postpone collecting the last taxes due from you.

Currently Not Collectible (CNC) is a provisional agreement from the IRS to put a hold to trying to collect your past due taxes. It can offer financial and mental relief from the constant difficulty of owing the IRS money.

You will not be subjected to the usual collection efforts. They will not garnish your salary or charge your bank accounts, and will not require you to set up an installment agreement.

Just as the name suggests, the IRS recognizes that it could not squeeze all the money out of you if it tried, at least not without making you homeless.

The Pros and Cons of CNC Status

Deferring tax payment sounds great, especially if you are struggling to make ends meet. CNC Status can make provisions such needed breathing room time that you can use to get back on your feet and discover a way to pay the debt you owe the IRS without the immediate threat of collections activity. The disadvantages should be considered as well:

·  The tax debt does not go away, as you still owe the tax arrears, the balance being that you must continue to accrue interest and late penalties.

·  The IRS will collect any tax refunds that you may be entitled to in future years. He will apply them to your outstanding balance in a process called “repayment displacement.”

·  The IRS can also send a notification to Lien IRS against your property or a belonging that appears on your credit report and puts creditors on notice that you owe an outstanding balance to the IRS.

How is Currently Not Collectible Benefiting?

A tax professional can assist you in assessing whether you are a good candidate for Currently Not Collectible status, as well as suggest other options for dealing with outstanding tax debts. They will calculate the monthly payments you would be required to make on an installment agreement, the likely settlement amount if you were to ask for an offer-in-commitment instead, and review your eligibility for CNC status. Although CNC status isn’t the right choice for every situation, but it does offer the following benefits:

Time to Make Proper Plan

CNC status offers you time to come up with a long-lasting plan. If you are eligible for an Offer in Compromise, you can put your application material collectively. You can also see if you’re qualified for penalty abatement or innocent spouse relief.

If you still have a remaining balance after making use of those options, you can pay it off in an installment agreement.

While CNC status can offer aid in some situations, it also comes with some disadvantages. First, your balance will keep increasing because the IRS will continually evaluate penalties and interest.

As stated above, your tax refunds may be held while in CNC status. A Notice of Federal Tax Lien can also be filed, making it hard to sell, refinance, or borrow against your home.

No Monthly Payments

You won’t have to make monthly payments towards your debt while in CNC status. If you are hardly making ends meet, this could give you the opportunity to stay afloat financially for the time being.

You also won’t have to worry about omitting a monthly installment plan payment and going into default.

 

 

CNC qualification requirements

Each person’s circumstances are unique, but CNC status can usually help you get out of debt with the IRS if you meet one or more of the following requirements:

·  You only have a few more years left in the statute of limitations the IRS has to collect for 10 years.

·  You make less than $ 84,000 a year, the cost of living falls within IRS guidelines, and you have little to no money left after paying basic living expenses.

·  Your only income is from Social Security benefits, welfare benefits, or unemployment benefits.

·  You are unemployed and have no other source of income.

How long does CNC Last State take?

The agent inserts a “closing code” into the taxpayer account when the IRS approves someone for non-collectable moment status. The code tells the IRS when to pull that taxpayer’s file for review to determine if circumstances have changed.

Ask the IRS what closing code they use when creating their non-collectible status so you know what level of income will trigger the IRS’s follow-up and when.

The amount of time remaining in Currently Not Collectible status is directly related to the amount of income you earn and how quickly your income situation improves.

Positive income rules

Positive total income includes the total of all positive values ​​shown in the income section of the income tax. It does not make a factor of losses and deductions. According to the IRS manual, the positive values ​​of the following sources of income are taken into account:

 

  • Salary
  • Interest
  • Dividends
  • Annex C net income
  • Schedule F net earnings
  • Distributions

Income earned from holding a regular job or running a small business as a sole proprietor is not indicative of your positive total income. Any unrealized profits, you can have the count too.

Rules for eligible expenses

Allowable expenses are called the “financial standards collection.” There are four sets of standard living costs. They include:

  • Food, clothing and other household expenses
  • Health expenses out of pocket
  • Housing and utilities
  • Transport

Compare your monthly IRS allowable expenses. In another example, let’s say that Jack, a single person with no dependents, pays $ 6,000 a month in rent. But the IRS knows that it usually costs about $ 2,000 to rent a one-bedroom apartment in the city where Jack lives. The IRS will only permit $ 2,000 in rental expenses, regardless of how much Bob actually spends.

You cannot usually include extravagant or discretionary expenses, even if they are a lot less than what other people spend. Your cable service may be limited to basic cable, not the unlimited movie streaming service you pay for. And you can probably forget about including the holidays you take each holiday season, no matter how carefully you budget it and cut costs.

The IRS definition of “difficulties”

According to the IRS, “significant default” means that paying anything towards your tax debt at this particular time in time would result in “severe deprivation”. You would literally be doing without some of life’s needs. This does not imply that life without making some expenses would be unpleasant or inconvenient.

The IRS puts into consideration that it will be a difficult situation and will put your account in Currently Not Collectible status if your monthly income is equal to or less than your required cost of living.