Tax Defense Network handles many clients who are completely overwhelmed by their tax debt and in such financial hardship that they cannot afford to make any payment toward their debt. Taxpayers whose financial situation makes it impossible to pay their tax debt may be eligible to find tax debt relief through Currently Not Collectible Status.
“CNC [Currently Not Collectible] is for people who only have enough money to cover basic living expenses and have no liquid assets to use to satisfy their debt,” explains Lori Hall, Debt Analyst at Tax Defense Network. “They are in severe financial hardship.”
To achieve Currently Not Collectible Status, the taxpayer must be prove to the Internal Revenue Service that they lack the financial capability to make any payment toward their debt. The IRS will examine income, expenses, equity, and assets to determine what, if anything, they can pay toward their debt. If after this analysis they find that the taxpayer has no means to pay their debt, the IRS will grant Currently Not Collectible status.
When the IRS considers a tax debt not collectible, they stop any attempts to collect on the debt. The taxpayer is not expected to make any payment toward their tax debt while in Currently Not Collectible Status, and the IRS’s enforced collection actions, like a wage or bank levy, stop. Penalties and interest, however, will continue to accrue on the debt.
The IRS considers Currently Not Collectible a temporary status:
“CNC is also sometimes called hardship deferral,” Lori at Tax Defense Network explains further. “The IRS defers collection on your debt until you are in a better situation financially. They reevaluate you every so often to make sure that you still belong in CNC.”
The IRS can reevaluate a taxpayer in Currently Not Collectible at any time. However, if a taxpayer remains Currently Not Collectible until the collections statute expiration date, the date at which the IRS can no longer legally collect on the debt, they will not be required to make any payment toward their tax debt.
“If you stay in CNC status until the statute of limitations on your debt ends, you don’t have to pay anything towards your tax debt,” Lori concludes, “but you really have to be in a bad place financially to qualify for CNC.”
Tax Defense Network is a national tax debt resolution company with a team of licensed tax professionals, enrolled agents, and CPAs. With an A+ rating from the Better Business Bureau, Tax Defense Network has successfully resolved over $120 million in client tax debt.