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Understanding The Concept Of Currently Not Collectible IRS Status
The Internal Revenue Service (IRS) is a powerful institution. When you owe them money, they can garnish your wages, levy your bank accounts and even seize your property in some instances. However, if you’re facing financial hardship and can’t afford to pay, the IRS provides relief through a program known as the Currently Not Collectible (CNC) status. As tax resolution professionals at Brightside Tax Relief, we’re here to guide you through the process of qualifying for this relief.
What Is The Currently Not Collectible Status?
As the name suggests, the Currently Not Collectible IRS status is a temporary hold placed on your account by the IRS when you cannot afford to pay your tax debts. Think of it as a safety net for taxpayers experiencing significant financial distress. It is not a permanent solution because your tax debt isn’t forgiven or eliminated, but it pauses aggressive collection tactics and allows taxpayers some breathing room.
Criteria For Qualification
To qualify for the CNC status, you must prove to the IRS that you are experiencing severe financial hardship. Here are the crucial points to note:
- The IRS will consider your monthly income and basic living expenses.
- Basic living expenses include rent or mortgage, utilities, car payments, food, healthcare and other essential costs.
- In most cases, taxpayers qualify for CNC if the IRS determines that any action to collect tax debts would cause the taxpayer to be unable to meet necessary living expenses.
The Evaluation Process
Obtaining the Currently Not Collectible status is not a straightforward process. The IRS will perform a rigorous assessment of your financial situation. You must submit a complete financial disclosure to the IRS via Form 433-F or Form 433-A.
The Impact of the Currently Not Collectible Status
While the CNC status helps reduce the immediate pressure, being in this status has both benefits and disadvantages.
- The primary benefit is getting immediate relief from any IRS tax collection action.
- On the downside, the IRS will continue to assess penalties and interest on the outstanding tax debt.
- Moreover, the IRS will also conduct periodic reviews of your financial situation. If the agency determines you can afford to start paying, they may remove the CNC status.
Navigating With Professional Assistance
The Currently Not Collectible IRS status can provide much-needed relief, but it might not be the best resolution option for everyone. It requires a thorough understanding of IRS procedures and regulations. At Brightside Tax Relief, we recommend seeking professional assistance to evaluate all your options and choose the most beneficial one for your situation.
Understanding IRS Form 433-A
Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, is a primary tool that the IRS uses to determine your eligibility for CNC. Completing and submitting this form is a critical step in applying for Currently Not Collectible status. For detailed information on this form, visit the IRS website.
Conclusion
The Currently Not Collectible IRS status is an important lifeline for taxpayers experiencing severe financial hardship. However, it is crucial to understand the implications of this status and to navigate it effectively to avoid potential pitfalls. As professionals in tax resolution, Brightside Tax Relief is committed to helping you achieve your tax relief objectives. No doubt, the information provided helps you understand this vital IRS program better, and brings you value, as you take active steps to regain control over your tax situation.
