Spokane IRS Currently Not Collectible
Every year, millions of Americans are left with unpaid tax burdens. Many are completely unable to make any sort of payment because their financial situation is so tight. This scenario is especially common with business owners and other filers who pay taxes outside of typical income withholding.
The good news is that when you are currently unable to pay, the IRS can temporarily put a pause on collection actions. By declaring that your account is “currently not collectible,” the IRS is basically putting a hold on making any attempts to come after you for back taxes.
Securing temporary, currently not collectible status does not pause your tax penalties and interest, however. Because of this concern, you may want to seek out other forms of tax relief while your account’s collections are currently on pause.
Instant Tax Solutions can help you apply to have your account declared currently not collectible, and we can also help you seek out other forms of relief. We have helped thousands of Americans like you across multiple states learn how to get control over their tax situation.
When you are ready to start planning ahead for a brighter financial future, reach out to us at (888) 886-5526 or contact us online to schedule a free, confidential consultation and financial review.
What Is Spokane IRS Currently Not Collectible Status?
“Currently not collectible” is a status the IRS applies to certain accounts that have demonstrated an inability to make any meaningful payment on their back taxes. That can include accounts with limited income, which is all tied up in regular and necessary living expenses.
It can also involve individuals and businesses that have distressed finances, meaning there is little to nothing to collect.
The IRS may automatically consider your account as currently not collectible after an internal review. Filers can also request to be placed into IRS currently not collectible status in order to delay collection efforts.
An account declared currently not collectible will be reviewed periodically, at least once annually, in order to determine if its financial situation has changed. If the IRS determines that your ability to pay has been restored, they may end currently not collectible status immediately.
What Does CNC Status Do for My Tax Debt?
“Currently not collectible” does not erase any tax burdens, nor does it actually delay any deadlines you may be facing. Penalties and interest will continue to be added to your balance.
However, the IRS will pause messages and other efforts to contact you while the status is in place. They also will not issue any new levies, including bank levies or wage garnishment levies, in connection with the tax account.
New tax liens may be issued to filers who owe a balance over $10,000. These liens can complicate the filer’s ability to sell or transfer assets.
A filer can request to have certain pieces of property discharged from the lien or have the notice of the lien withdrawn if they can demonstrate reasonable cause, such as a hardship.
While an account remains in currently not collectible status, the IRS will continue to assess taxes owed on any new income. The person (or business) named on the account should continue to file tax returns and keep up with any new balances due; otherwise, their tax debt will continue to snowball.
The IRS may also take new collection actions, such as issuing a tax lien, once the account’s debts reach a certain amount.
So, despite the breathing room a currently not collectible status can provide, it should only be considered as a temporary solution while the filer works out a way to get current on their taxes owed.
How Does the IRS Determine When a Tax Debt Is Currently Not Collectible?
In order to determine currently not collectible status, the IRS will consider a range of factors, including the filer’s:
- Current assets, including all account balances and property
- Regular income
- Regular, reasonable expenses
- Other debts and obligations
- Efforts to repay or resolve their debts, such as through a bankruptcy filing
What Can I Do Once My Account Has Been Declared Currently Not Collectible?
The best actions to take depend on your unique financial and tax situation. Instant Tax Solutions can review your finances and determine what, exactly, you owe. We can then help you explore your options in order to arrive at the ideal solution for your needs and goals.
You will be considered for all forms of possible relief. Common examples include:
The IRS is often willing to waive certain penalties, along with the charged interest, which is most likely to occur when you are requesting a first-time abatement. You can also seek to establish that you have another reasonable cause, such as a disaster or other situation out of your control that prevented you from filing on time.
Requesting a penalty abatement is easier than the average taxpayer may think. While it may not seem like much, in some cases, waived penalties can significantly chip away at what you owe.
This reduction in debt can make it easier to repay back taxes and stop the IRS from hassling you once and for all.
Offer in Compromise
An offer in compromise is, essentially, a settlement agreement with the IRS. It allows you to pay what you can and to have the remainder of the debt essentially forgiven. Any payments must be made in a lump sum or a series of payments.
Further, the first payments are expected up front, along with an application fee. The applicant can have their proposed offer rejected, potentially putting them in a more precarious spot than before.
That risk is why it is so beneficial to have tax experts at your side. We can help you determine the best offer you can make, with a high likelihood of having the IRS accept it while seeking to reduce your tax debt to the extent possible.
Installment agreements are the IRS’ go-to proposal for those who owe back taxes. While it is true that an installment agreement can help low-income earners and those with high tax debt make progress toward repayment, the terms may also end up being hard to comply with over the long run.
It is beneficial to consult with tax experts who can help you determine the best payment plan to meet your needs while helping you seek out any forms of relief available.
What Should I Do While My Tax Account Is in Currently Not Collectible Status?
Once the IRS has agreed that your taxes are currently not collectible, there are a number of beneficial actions you can take.
1. Review Your Finances in Full
Getting breathing room should be your prompt to take a long, hard look at your financials from the past few years. You want to ensure that what you reported was accurate and that you owe everything the IRS says you do.
If you notice that you can adjust the amount you owe, such as by correcting your declared income, adding new deductions, or claiming new credits, you can file an amended return up to three years after the original due date.
While looking at your finances, determine where your biggest sources of tax liability came from. You should also calculate your average earnings and expenses on a monthly and quarterly basis over a period of the past three years.
Instant Tax Solutions can help you with these calculations, which will be vital in forming a plan for how to move forward.
2. Don’t Take Any Efforts to Hide Assets or Avoid Liability
Purposefully selling assets at a loss, transferring them to family members, or otherwise trying to shield what you own from IRS collections can all be considered forms of fraud. Be careful about the financial moves you make, in other words, while your account is considered not collectible.
Treat your assets and expenses as if your taxes are still due — because they are. Try to determine what you would be able to pay through something like an installment plan or offer in compromise in order to prepare for an eventual solution to your tax problems.
3. Keep Paying Any New Taxes and Filing All Estimated Payments and Returns
The addition of new tax debts can cause the IRS to consider alternative means to collect on a debt, such as by issuing new liens for accounts that surpass $10,000. Further, the IRS will consider your efforts to remain in good standing when evaluating forms of relief like penalty abatement or an offer in compromise.
Try to get back into financial solvency by keeping up with any new taxes as they arise while you make a plan for paying the rest back, with any reductions you may be able to obtain.
Reach out to Our Tax Experts for Assistance With Pausing Tax Collections
Having your account declared currently not collectible can be a positive first step towards final tax relief. At Instant Tax Solutions, we want to help you pay as little as possible while still getting on the good side of the IRS.
Not only can we help you determine exactly what you owe and figure out what options you have for relief, but we can also help you prepare for any future tax obligations that come your way.
Our goal is to help you feel unconstrained by your past financial challenges. We want you to feel optimistic about your future, in control of your finances, and ready to seize any opportunities that come your way.
When you are ready to take steps towards a tomorrow that is less stressful, call us at (888) 886-5526 or contact us online to schedule your free case and accounts review.