Depending on a delinquent taxpayer’s financial situation, currently not collectible may be a good option to get the IRS off your back.
While this status will not get rid of your debts, it may give you the chance you need to find firm financial footing. Let an Orlando currently not collectible status lawyer evaluate your circumstances, and see if this is a good fit for your situation and if you qualify.
Understanding Currently Not Collectible Status
Currently not collectible status—also known as CNC status—status is something that can be granted to taxpayers by the IRS. Taxpayers who are granted this status do not see their tax debt forgiven or reduced. Instead, it serves as a temporary pause on the IRS’ efforts to collect on a debt.
While this status is in place, the IRS will not send collection notices or attempt to levy taxpayer wages. An Orlando CNC attorney can advise a taxpayer as to whether currently not collectible status is the best option available to them. them. Sometimes we recommend and negotiated Currently Not Collectible status as a final resolution for a client’s tax liability. Other times we use it as a temporary solution while we put the pieces into place for a permanent resolution.
Risks and Benefits of CNC Status
It should come as no surprise that there are both positives and negatives for being deemed “not collectible” by the IRS. While this status can give a taxpayer a needed break from collection efforts, there are also downsides to this arrangement that can last over the long term. An Orlando attorney can help you weigh the pros and cons of currently not collectible status.
Benefits of CNC
At its core, currently not collectible status is a temporary break from the legal notices and collection efforts that come from the IRS. For many people, a temporary break is all that is needed to secure their financial position and pay what is owed. Sometimes, CNC status is used as a longer term resolution to a tax issue or as part of a longer strategy for a short-term fix.
While this status is active, a taxpayer is protected from an array of frustrating collection efforts including bank levies and wage garnishments. The taxpayer is not free from their obligation but they will have the freedom to address other financial hardships first or plan a longer-term fix while their IRS tax debt is on hold.
Another benefit to CNC status is the statute of limitations on collections continues to run, meaning that the liability can “fall off” and be considered no longer collectible permanently. We at Orlando Tax Law have had cases where hundreds of thousands of dollars have become uncollectible with strategic use of CNC status.
Additional, currently not collectible status is an option for taxpayers who are “non-compliant” and still have past due or unfiled returns to file. Installment agreements (aka payment plans) and Offer in Compromise settlement proposals cannot be set up or requested when a taxpayer is non-compliant and has past due returns that need to be filed.
Finally, currently not collectible status can also help resolve a passport revocation certification.
Risks of CNC
There are some downsides that come with securing CNC status. Interest and penalties continue to accrue. When currently not collectible status ends, a taxpayer’s interest and penalty charges (and thus the total due), will be higher than ever before. This is just one reason why you should meet with a tax attorney to discuss your tax issues so that a customized plan can be tailored to your unique situation and goals.
Currently not collectible status also does not prevent the filing of a formal Notice of Federal Tax Lien against the taxpayer. A tax lien can negatively impact a taxpayer’s professional licenses or certifications and make it difficult to sell real property.
Seek Counsel from an Orlando Currently Not Collectible Status Attorney Today
There are benefits and risks that come with CNC status that should be carefully weighed by a taxpayer. Pursuing this option can be a lifesaver for some taxpayers but a hindrance for others. You do not have to estimate whether CNC status is in your best interest or not. An experienced Orlando currently not collectible status lawyer can advise you on your options and create a customized plan based on your unique situation and goals. Call now to learn more.
