IRS Currently Non Collectible (CNC) Status

Many taxpayers who owe unpaid federal income taxes are truly unable to make any payments on those taxes.

Naturally, the taxpayer's opinion about being unable to make payments is probably different from IRS' opinion about the taxpayer being unable to make payments.

IRS makes allowances for taxpayers who are unable to make payments on their old tax balances.

If a taxpayer meets IRS requirements for this situation, (s)he will be classified by IRS as Currently Non Collectible (CNC).

CNC Status doesn't remove or eliminate the taxes. It just puts them "on hold" for as long as the taxpayer maintains the CNC Status. The tax is still owed and continues to accrue appropriate penalties and interest.

CNC Status is a tremendous benefit for taxpayers who gain this classification. IRS will cease all collection efforts against CNC taxpayers and will release all levies from their wages.

To qualify for CNC Status, a taxpayer must have Negative Monthly Cash Flow as defined by the IRS Monthly Cash Flow calculation.

In addition to the negative monthly cash flow requirement, taxpayers will be required to provide IRS with copies and other documentation to support their monthly income and expenses they report to IRS. IRS can require proof of claimed items such as:

1. Three months of pay stubs for all income sources

2. Three months of bank statements for each bank account

3. Rent or mortgage if not on bank statements

4. Medical insurance payments if not deducted on pay stubs

5. Proof of medical expenses

6. Copies of utility statements

7. Life insurance payments

8. Union dues

9. Auto payments and insurance

10. 401k deductions required by employer

11. 401k or other retirement account statements

12. Anything else IRS may want to see

Once classified as CNC, taxpayers will receive yearly reminder notices of their tax debts.

Taxpayers will not remain CNC indefinitely, but will be subject to periodic review. New Financial Information will be required so IRS can update its files. New Monthly Cash Flow calculations will be made to determine whether or not the taxpayer still qualifies for CNC Status.

CNC Status can be lost by taxpayers. In order to keep their CNC Status, they must:

• File all future tax returns on time

• Pay all taxes on those tax returns

Failure to meet these requirements will result in the default of CNC Status. IRS will then begin new collection efforts, including wage and bank levies.

Features and Benefits

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