Back Tax Returns & Currently Not Collectible Status

Posted on 25. Apr, 2012 by in Back Tax Returns, Filing back tax returns, Help Filing Back Taxes

Once you file your back tax returns, you may have a difficult time paying the IRS.  There may be a solution.  The IRS may designate a taxpayer as Currently Not Collectable (CNC) when the taxpayer is unable to qualify for an offer in compromise or cannot afford to make payments in an Installment Agreement because of inability to pay.

Being Currently Not Collectable does not mean that the taxpayer is relieved of the tax liability.  Penalties and interest will continue to accrue and the statute of limitations continues to run, however the IRS will pause collection actions.  If the IRS determines that a taxpayer’s financial situation has improved, the CNC status will be removed from the taxpayer and the IRS will begin actively collecting the owed taxes.  A tax attorney or professional tax relief specialist can help taxpayers assess if filing a request for CNC status is the best alternative to avoid financial hardship.  But get the back tax returns filed first.

If a taxpayer is experiencing financial shortfalls and their income is below the IRS determined allowable expenses, CNC status may be a good option.  Especially if it does not appear that the financial situation will improve.   CNC may also help in cases where a taxpayer may have high equity in assets and therefore does not qualify for an offer in compromise; or the allowable expenses exceed the taxpayer’s income making the Installment Agreement not possible.  If the statute of limitations is close to expiring and the taxpayer has more allowable expenses than income, a CNC may also be warranted.  The statute of limitations may expire while the taxpayer is in CNC status.

It is important to remember that Currently Not Collectable status is designated for taxpayers in dire financial situations and simply cannot afford to pay the liability.  It can buy some time for the delinquent taxpayer to recover financially and can relieve some of the stress of aggressive IRS collections.  Once the IRS determines that the taxpayer can afford to pay the taxes, the collection hold will be lifted and collection will resume.  Filing back tax returns may not be so tough after all.

We are committed to helping you with your back tax returns.  Our experienced team of CPAs and tax professionals know how to deal with IRS tax issues.  We will work on your behalf to settle your tax problem in your favor.

Your tax problem will certainly not go away on it’s own.  Call us now at 1-888-570-1033 for a FREE consultation.

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