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IRS Currently Not Collectible Status, What Is It and What Do I Need to Know?

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IRS Currently Not Collectible Status, What Is It and What Do I Need to Know?

IRS Currently Not Collectible Status, What Is It and What Do I Need to Know?

Currently Not Collectible status, or Status 53 as it also known, is an interesting resolution option. In a Currently Not Collectible (CNC) status, the IRS is convinced that you cannot make any payments. The downside is interest and penalties continue to accrue.  The IRS reserves the right to request a periodic review of your current financial information to determine if your ability to pay has changed.

When Would Someone Want to Pursue Currently Not Collectible Status?

1. Too Much Equity but No Ability to Pay Monthly

If you have equity in an asset, such as your house, that would prevent you from being accepted for an Offer in Compromise; but no disposable income for a monthly payment plan.  This is likely a situation where you cannot access the equity through sale of the property because the cost to sell the property is in excess of the equity.

2. 10 Year Statute of Limitations

The IRS has 10 years from the date the taxes were assessed to collect the debt.  If the statute of limitations is about to expire, Currently Not Collectible is an excellent solution, because the CNC status does not toll the statute of limitations.  An Offer In Compromise does toll the statute of limitation during the period of time that the offer is being considered.  It is absolutely imperative that you know the CSED (Collection Statute End Date).  You can obtain the information under the Freedom of Information Act.  

How Can I Obtain Currently Not Collectible Status?

To be determined uncollectible by the IRS, you must provide a completed financial information statement.  It is absolutely critical to know in advance that the IRS will find you to be uncollectible before you review it with an agent or you submit it by mail.  Without this guarantee, you are supplying the IRS with all the information to assist in collecting from you, such as bank levies, wage garnishments, etc...  It is an excellent solution if it is your best option AND you qualify.  It’s not an easy process by any means, and you have to understand the allowable expenses.  This is one of those areas you can make things worse if you get it wrong.  

Contact us for help walking through the different types of solutions that may be available!

This can be a tricky decision.  Contact us for help walking through the different types of solutions that are available, Installment Agreement, Innocent Spouse or Injured Spouse, Offer In Compromise, Penalty Abatement or potentially even Bankruptcy

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