Are you facing letters and notices from the IRS about past-due taxes that you can’t afford to pay? If so, you are not alone. Millions of people like you face these issues every year. It is even worse when your financial situation is dire and you do not know how to make the payments the IRS demands.
The first thing to know is this: do not forego payments and do not ignore the letters. This will only make matters worse. There are options and avenues available to allow you to get right with the agency and get your finances back on track. If you cannot pay at all, you may be able to get a temporary pause on collection actions through what is called a “currently not collectible” claim.
Getting this status is not easy, and it does not pause penalties and interest. It is, however, a means to get some breathing room so you can strategize how to get your finances back in order. At Instant Tax Solutions, that is our entire reason for being.
Our experienced Houston tax relief lawyers are here to help you get your accounts back on track. It may start with a currently not collectible, but we can also help you to plan for those payments and to significantly brighten your financial future. All it takes is a phone call. Reach out at (888) 921-3781 or contact us online for a free, confidential, no-obligation consultation today.
What Justifies a Houston IRS Currently Not Collectible Status?
Currently not collectible status means that the IRS agrees you have demonstrated an inability to pay your back taxes in any meaningful way. A good example is if all of your income goes to paying your other bills and living expenses. It also refers to businesses that have no assets that the IRS can levy to collect.
In some cases, the IRS may conduct an internal review and determine on its own that you are currently not collectible, but this is rare. Often, however, the tax filer will apply for this status as a means of warding off collections efforts for a time.
When you are given this status, the IRS will review your account periodically to determine whether your situation has improved. This will happen at minimum once per year. They can, at their discretion, end the status at any time. This is why it is vital to take steps to get right with the agency as soon as possible after they grant currently not collectible status.
Filing for IRS Currently Not Collectible Status
The first step is to contact the IRS and request this status. They may require you to complete Form 433-F, 433-A, or 433-B as well as providing proof of your current financial status. This means you will need to gather evidence including your salary, your expenses, and other financials. The more evidence you can provide, the more likely you will be to be approved for currently not collectible status.
Instructions for contacting the IRS to get the process started will be included in your letter or notice. Always follow the instructions there and do not delay. If you are not sure what to do, reach out to Instant Tax Solutions. We are ready to go through your finances, work with you, and stand up for your rights to the IRS while providing you the financial peace of mind you deserve.
How Do I Prove Currently Not Collectible Status?
To prove that your finances are so limited you cannot meaningfully pay your back tax debt, you will need to collect a wide range of documentation. This will include proof of all of your current assets, including your property and account balances including investments, checking, saving, and others. You also need records of your income.
Provide evidence of your current regular expenses such as mortgage, car payment, utilities, food bills, and the like, as well as any other obligations and debts you may have. Finally, put together any efforts you have made to resolve your debts, including bankruptcy if you have filed.
Does Currently Not Collectible Eliminate My Debt?
Currently not collectible status does not eliminate your debt. It is only a temporary hold on your requirement to pay. It will, for a time, delay collections efforts by the IRS, but those debts do not go away. The agency may apply additional penalties and interest will continue to accrue. For this reason alone, currently not collectible status is not a solution to your tax debt. It is merely a way to get some room to plan and breathe.
If your balance is more than $10,000, the IRS may also continue to impose tax liens on property, which can make it difficult for you to move, sell, or transfer assets that might otherwise be used to help pay your debt. You may have options to seek the discharge of liens on some pieces of property if you can demonstrate that the liens cause you unreasonable hardship or interfere with you eventually paying your taxes.
In addition, the agency will keep assessing tax on new income, so it is vital to keep current with ongoing taxes and returns. The IRS will not, however, garnish your wages or issue account levies while you are still in currently not collectible status.
Will Currently Not Collectible Remove Liens and Levies?
Currently not collectible status will not remove existing liens and levies. It just means that the agency will not apply any new levies (though they can apply new liens). Once again, this status merely means that you have a stay on new collections activities, to a point. If your tax burden continues to grow, the IRS can take action on the new amounts.
What Are My Next Steps?
After your status is granted, you should immediately look at taking options for relief of your tax burden. Do not wait, and do not try to go it alone. If you have not already reached out for professional tax relief assistance, now is the time. Instant Tax Solutions is ready to help you go through your records, examine your options, make a plan, and move towards reducing or eliminating the tax burden that hangs over your head.
Options for Relief Following Currently Not Collectible
There are several options for relief following your currently not collectible status. One or more of these may apply to you, and any can significantly reduce the amount that you owe the IRS, either by removing penalties and fees or reducing the core back tax liability you hold. The most common of these include:
- Offer in compromise
- Installment plans
- Fee and penalty abatement
- Amended tax returns
- Removal of liens and levies
Offer in Compromise
An offer in compromise essentially means that you negotiate a settlement with the IRS to pay less than you owe, which the agency will then accept as payment in full. This is one of the more common forms of tax relief sought, and it often goes hand-in-hand with currently not collectible status.
Your offer in compromise forgives part of your debt in essence, and can be made as a series of payments on a schedule or as a single lump sum payment. You will need to pay an application fee, which can be expensive, and will need to submit your initial payment along with your application.
Sometimes, however, the IRS will reject the offer, which can leave you in a worse position than before. This is why it is so important to have help from the experienced, expert tax professionals at Instant Tax Solutions.
Installment Plans
Installment plans are among the simplest means of negotiating with the IRS. When you apply for this method of relief, you agree to make smaller payments over a period of time to gradually whittle down your debt. What makes installment plans more risky is that while you pay your debt, interest and penalties continue to accrue, so in the end, you may well pay significantly more than you owe.
Like an offer in compromise, installment plans require a burden of proof that you need the plan to pay down your taxes. They also carry an application fee, and they can be denied by the IRS. With the help of a professional tax relief service, you may be able to secure a payment plan and remove penalties and fees.
Fee and Penalty Abatement
Fees and penalties that accrue interest can make a difficult tax burden impossible. With the right help, you can apply to have some of these fees and penalties removed, which also removes the interest that goes with them. This aloe can significantly reduce your tax burden. At Instant Tax Solutions, we understand the strategies needed to successfully abate penalties and fees.
File an Amended Return
Finally, you may be able to file an amended tax return for the tax year in question. This can allow you to take advantage of deductions and credits you did not claim the first time around. It can sometimes significantly reduce or even erase your tax burden entirely.
Get Help With Your Tax Burdens Today
All of the above are strategies to relieve your back tax stresses. It all starts, however, with a call to Instant Tax Solutions. For over 15 years, we have helped thousands of people just like you find relief from the burden of the back taxes they owe to the IRS. We are ready to help you review your records, form a plan of attack, and execute to alleviate your debt and get back on the path to financial freedom. Call us today at (888) 921-3781 or use our online contact form to schedule your appointment.
