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Many taxpayers may find that the tax bill they owe is more than they can afford. You do not dispute that you owe the money, but you are unable to pay. When you can prove that you are in dire financial straits, the IRS may put you in “currently not collectible” status, which pauses collection efforts until you have regained your financial footing.
If you are seeking currently not collectible status in Alexandria, contact our IRS collections lawyer to guide you through the application process and explain your responsibilities if your application is successful.
When the IRS puts a taxpayer in currently not collectible (CNC) status, it is acknowledging the taxpayer cannot afford to pay their tax debt at the present time. Both individuals and businesses can seek CNC status, and the IRS will not attempt to collect the tax debt for as long as CNC status remains in effect.
However, interest and penalties continue to accrue, and the IRS may place (or keep) a tax lien on any property you own. If you are owed tax refunds, the IRS can intercept them and apply them to your debt.
The IRS will periodically review your eligibility to maintain CNC status, and when your financial situation improves, the collection efforts may resume. An attorney in Alexandria can help you establish a plan to repay the tax debt when your financial situation eases and currently not collectable status is removed.
The IRS can pursue tax debt for up to 10 years. When the 10-year statute of limitations has passed, the IRS must cease its collection efforts. Debt from prior to the 10-year cutoff is written off, regardless of the amount.
Most IRS programs to help taxpayers resolve their tax debts will pause the statute of limitations. For example, if you enter into a two-year installment payment agreement but fail to adhere to its terms, the IRS can add the time that the agreement was in effect to the time they have to collect your debt.
The CNC program does not pause the statute of limitations. Every year that you have CNC status, you are one year closer to the IRS writing off your debt. An Alexandria attorney may recommend pursuing CNC status because it offers this powerful advantage over other IRS debt resolution programs.
When you apply for CNC status, the IRS will scrutinize your financial situation. Most individuals can begin the process by filing IRS Form 433-F, but individual taxpayers who are self-employed or whose tax debts exceed $50,000 may have to file IRS Form 433-A. Businesses initiate the process by filing IRS Form 433-B.
If you have failed to file any of your tax returns, you must do so before applying for CNC status. An Alexandria attorney can help you prepare and file any late returns. If you are granted CNC status, you must file all your tax returns on time or your CNC status may be revoked. Businesses must continue to make their federal tax deposits to maintain CNC status.
The IRS will use your returns to determine whether you continue to be eligible for CNC status. When your financial situation improves, the IRS can resume collection efforts including interest and penalties that have accrued since you were granted CNC status.
CNC status allows you breathing room to improve your financial condition before addressing your IRS debt. However, it is a temporary solution unless the 10-year statute of limitation expires before you lose CNC status.
Pontius Tax Law can explain the advantages and disadvantages of seeking currently not collectible status in Alexandria. Reach out now if you are in a bind with a debt that you currently cannot pay.
Pontius Tax Law, PLLC is a tax law firm that strives to resolve sensitive tax problems through trust, dedication and value. The law firm was founded by John Pontius with offices in Washington, DC, Rockville, MD, Bethesda, MD, Fairfax, VA, and Alexandria, VA. Mr. Pontius represents individual and business clients with sensitive and serious tax matters before the Internal Revenue Service and state taxing authorities. His client base is local, national, and international.
Over the course of his career, Mr. Pontius has represented businesses and individuals with complex tax issues in the following areas: FBAR examinations, offshore and domestic disclosures, FATCA, FIRPTA, tax planning, unfiled tax returns, release of tax liens and levies, trust fund recovery penalty, IRS and state audit examinations, as well as appeals, penalty abatement, U.S. Tax Court litigation, along with defense of tax fraud and evasion. If you require assistance from a tax lawyer, contact Mr. Pontius to discuss your situation.
