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Filing Requirements & Guidelines for Achieving Currently Not Collectible Status

September 17, 2013

Taxpayers with tax debt can seek the status of Currently Not Collectible (CNC) if they are unable to pay any amount of tax debt in their current financial situation. Achieving Currently Not Collectible status helps them avoid the risk of IRS collection actions.

It is important for taxpayers to understand the filing requirements of the program before applying to ensure that they qualify for it. When applying for Currently Not Collectible, all open filing requirements must be met, and delinquent returns must be resolved.

Generally, a taxpayer must attach supporting documents (depending on the case), including:

  • Collection Information Statements (CIS)
  • Approved Form 4183, Recommendation re: Trust Fund Recovery Penalty Assessment
  • Copies of transferee assessment recommendations
  • Copies of suit recommendations to reduce the tax claim to judgment
  • Replies to Courtesy Investigations
  • Copies of tax returns
  • Other documentation to support the CNC determination

Before granting the status of CNC to a taxpayer, the IRS conducts a compliance check and reviews the documents that contain the taxpayer’s case history. It includes documents supporting the CNC determination, and information on assets owned by the taxpayer.

It is a misconception that all Currently Not Collectible cases are regularly reviewed by the IRS. Cases where there is no hope of recovery of tax debt are not followed-up. CNC cases where the status was achieved due to financial hardship are followed-up to see if there is an improvement in the taxpayer’s financial condition. Cases where the IRS is unable to locate or contact taxpayers with tax debt are also followed-up by the IRS.

The IRS will begin collection activity, including the sending of collection notices and issuing a tax lien, whenever they see improvement in the taxpayer’s ability to pay the tax debt. The IRS can collect a tax debt until the Statute of Limitations of ten years is reached.

Before contacting the IRS, taxpayers must consult a tax resolution company or a tax professional to better understand their case, IRS filing requirements, and the resolution process.

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