Regal Tax & Law Group, PC represents clients throughout California and the nation who are involved in tax controversies. Taxpayers who owe federal and state taxes from previous years but currently have no ability to pay those debts may qualify for “currently not collectible” status. Because this classification is only a temporary measure that does not eliminate the tax debt, it takes a skilled tax attorney to protect your rights.
Whether you owe back taxes of $50,000 or more to the Internal Revenue Service or state Franchise Tax Board or the Internal Revenue Service (IRS), you need the trustworthy advice we provide. We will take the time to understand your circumstances, explore all your tax-relief options, and determine whether you qualify for currently not collectible status. Contact our office today to schedule your initial consultation.
What is currently not collectible status?
The IRS classifies taxpayers who owe back taxes but have no ability to pay those debts as currently not collectible (CNC). This hardship status is granted to taxpayers who can prove that they have no ability to pay the tax debt currently; however, this status is only a stopgap measure designed to give taxpayers breathing room to get their finances in order.
Once your taxes are designated as CNC, the IRS must cease all collection activities; any wage garnishments or bank levies that may have been imposed will be suspended. The tax debt is not eliminated, however, and any penalties and interest continue to accrue.
Do I qualify for Currently Not Collectible Status?
To qualify for this hardship status, you must submit a Collection Information Statement (CIS) to the IRS which details all of your assets, income, and monthly expenses. The IRS will review the information to determine whether you have the ability to pay the tax debt. The IRS will also consider other factors, including:
- The amount of taxes that you owe
- Whether you are self-employed
- Your age and health
Given that completing the CIS and compiling the required financial information can be complicated, it is wise to enlist the services of the experienced California tax attorneys at Regal Tax & Law Group. We have a working knowledge of both the Internal Revenue Code and the tax relief programs offered by the IRS.
When you become our client, we will carefully review your financial situation before submitting a request for CNC status to verify that you meet the criteria. If we believe that you are eligible, we will work closely to prepare the required forms, submit your information to the IRS, take over all communications with the agency, and make sure your interests are protected.
How long can I remain in this status?
CNC status is only a temporary reprieve that is only initially granted for a period of one year. Each subsequent tax return filed while you are in currently not collectible status is examined to determine whether you are able to begin making payments on the tax debt. If the IRS finds that your situation has not improved enough to allow you to make payments, currently not collectible status will be extended for another year.
Although the tax debt is not eliminated and the IRS temporarily ceases collection activities, there is a 10-year “statute of limitations” on income taxes which continues to run while you are in currently not collectible status. If the back taxes cannot be collected within that 10-year period, the IRS cannot file a lawsuit against you to do so and the debts expire automatically.
Finally, the California Franchise Tax Board also grants CNC status in 6-, 9-, and 12-month periods to individuals who do not have the ability to pay their state income taxes. In any event, currently not collectible status is only available in cases of serious economic hardship and is not easily granted by the IRS or the FTB.
Moreover, the tax authorities will do everything in their power to collect the back taxes, along with penalties and interest. This is why you should never file for hardship status with the IRS or state Franchise Tax Board (FTB) without the guidance of an experienced tax attorney.
Trust Regal Tax & Law Group to provide you with informed representation about all your tax relief options. We know the ins and outs of currently not collectible status and will determine whether this is the right choice for you.
Contact Our Experienced California Tax Attorneys
While the IRS and FTB review CNC hardship claims on a case-by-case basis, working with our experienced tax attorneys will stand you in good stead. We have a well-earned reputation for adhering to the highest ethical standards and helping our clients remain in good standing with federal and state authorities. If you owe federal or state income taxes of $50,000 or more and cannot pay, don’t delay. Contact our office today for the tax relief you need and deserve.