Many taxpayers are unable to pay their tax debt as they don’t have the money. Non-Collectible Tax Status (or CNC) may be a potential solution for individuals facing such a situation. The IRS places the accounts of such taxpayers in CNC status if they can prove that clearing the unpaid taxes will lead to “economic hardship”. The onus of proving this to the IRS, however, is on the taxpayer, and the IRS will not go ahead and flag an account as CNC, unless requested.
Reasons for Placing an Account in CNC
While “economic hardship” is one of the primary reasons, there are certain other reasons for which the IRS may place an account in Currently Non-Collectible status. Here are some of the other reasons due to which the IRS may place an account in CNC status:
- Inability to track or locate the taxpayer
- Expiration of the statutory period for collection
- Inability to collect from taxpayers as they reside in a foreign country
- A corporation liquidated in bankruptcy
- Death of the taxpayer and a zero possibility of collection from their descendants or descendant estate
Requesting IRS Non-Collectable Status
The IRS grants Currently Non-Collectible status only to qualified taxpayers. If you are planning to avail the provision, an IRS tax expert determines whether you meet the criteria and prepares a comprehensive argument to support the request. If the IRS accepts the negotiated petition, the agency stops trying to collect your outstanding tax debt. In addition, all levies and garnishments are released.
Need Expert Assistance?
Let us help you determine if you meet the requirements for Currently Non-Collectible Status. To schedule a free, no-obligation consultation with one of our experts in Dallas, Fort Worth, Houston TX and nearby areas, simply call 972-484-0829.