Currently Not Collectible (CNC) is a temporary status the IRS places on accounts of taxpayers who have deferred tax bills and cannot remit payments just yet. The CNC status intends to give people going through financial turmoil a break from paying their taxes while protecting them against aggressive tax collection methods, such as an IRS tax lien, levies, and wage garnishments.
With the CNC status, you can concentrate on making more money to pay off your tax debt without intimidating letters and phone calls from the IRS or levy threats. Read on to understand whether this is a viable tax resolution option for you.
What It Means to Be Under Currently Not Collectible Status
Although the CNC looks all glittery, there are a few catches you much be aware of before you consider applying for it.
- Your debt is not paid off – Although the CNC status temporarily stops collecting taxes for some time, you must pay your past tax debt once you acquire a better financial situation. Note that your debts keep accumulating late penalty fees and interests, making you pay more in the long run.
- Refund offset – This means that you still need to file your income tax returns. However, the IRS withholds any tax refunds you get while your account is Currently Not Collectible until your tax debt is fully paid.
- CNC status is not permanent – The IRS consistently reviews your financial situation using a closing code (cc) keyed in when your account was declared CNC. When pulled up, the code initiates the review process, revealing whether your income has improved, and your financial situation has changed.
- Your taxes may be written off – The IRS only has 10 years to collect taxes, interests, and penalties owed. After this time lapses, the statute of limitations is enforced, which bars them from collecting those debts. But there are exceptions.
Who Qualifies for The IRS Currently Not Collectible Status?
To qualify for the CNC status, you must provide the IRS with personal financial information that proves that you are unable to honor your tax debt payments. There are several requirements that you must meet to qualify for the CNC status. Some of the common ones include.
- Current unemployment without other income sources
- Little to no disposable income after paying for necessary living expenses at the end of the month
- Fixed income only from welfare, unemployment, and Social Security benefits
- Inability to work due to prolonged illness
Instead of taking matters into your own hands, let True Resolve Tax Professionals help you establish whether you fit the criteria. We understand the intricacies and understand all the requirements that will gain you the CNC status.
How to Apply for CNC
Applying for Currently Not Collectible status in New York is a complicated process that involves writing or calling the IRS. They calculate your disposable income based on your total positive income and essential monthly expenses. Your total positive income is a summation of the positive income on your tax return income section.
The Internal Revenue Manual names the following as positive incomes: interest, dividends, distributions, wages, plus Schedule C and Schedule F net profits. It does not include deductions and losses. The IRS compares these positive incomes to local and national standard living expenses, including food, clothing, housing, utilities, transportation, clothing, and out-of-pocket medical costs.
The IRS may attempt to disqualify you from CNC status, claiming your income is higher than quoted and that some expenses are unnecessary. To navigate these complexities, you need a reliable tax resolution services firm who understands the process and the necessary documentation that you need to qualify for CNC status. In this case, you need an avid negotiator who will boost your chances of gaining the CNC status for your account. We will also help you determine if the CNC status is the best option for you and suggest alternative tax debt settlement options. These alternatives may include Offer in Compromise (OIC), filing bankruptcy, or IRS installment agreements.
We Can Help You with The Currently Not Collectible Status
We are specialized tax experts in the tax resolution profession with adequate experience and knowledge to solve your tax problems using the best tax resolution options. Our IRS experts in New York help you relieve the stress of tax debt resolution by taking care of your tax concerns. Our priority is to ensure you eliminate the guesswork out of your tax debt resolution options and to empower you with the knowledge that can help you navigate other tax IRS issues.
Contact us today to get started on your application for the CNC status without confusion. We will guide you through the entire process, help you fill the forms, and won’t stop until you acquire the desirable Currently Not Collectible status.