What is Currently non-Collectible?
Currently Non-Collectible is a status assigned by the IRS to taxpayers who are unable to pay their taxes due to their current financial situation.
Is Currently Non-Collectible The Right Status For You?
Unlike other Fresh Start tax programs, Currently Non-Collectible (CNC) is a status rather than a program. While CNC status doesn’t eliminate tax debt, it halts collection activities, including bank levies, wage garnishments, tax liens, and threatening letters from the IRS.
CNC status allows you to develop a tax relief strategy without IRS interference. However, this status is temporary, so you must be ready to act once it ends.
How Do You Qualify?
To qualify for CNC status, you must first ensure IRS compliance by filing all required tax returns. Without filing, you’re not compliant and cannot qualify for CNC or any other IRS Fresh Start Initiative relief program.
After updating your tax filings, you must prove significant financial hardship that prevents you from paying outstanding taxes. The IRS evaluates several financial factors, including wages, interest, dividends, distributions, income, and real estate. These are compared to maximum allowable expenses for your zip code to determine if any funds remain for paying your balance.
If you present a strong enough case, the IRS must place you in CNC status and stop all collection activities immediately.
Can I Qualify On My Own?
Yes, you can apply for CNC status independently, but consulting with a tax relief professional is strongly recommended. Achieving CNC status is complex, requiring a compelling case to halt IRS collection activities.
Taxpayers who secure CNC status on their own may find themselves prematurely removed from it due to misunderstandings of the tax code or agreeing to unfavorable terms. Once out of CNC status, the IRS will resume collection efforts, often using the same aggressive techniques.
TaxRise recommends consulting a tax professional before requesting CNC status from the IRS. Applying independently may lead to agreeing to terms more favorable to the IRS.
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