IRS Currently Not Collectible

IRS Currently Not Collectible

What does this program mean and how can it benefit you if any at all?

A lot of the time, we hear about wonderful IRS programs that can help put financial troubles to rest until a later date. That sums up a Currently Not Collectible status. If you are earning less than the average income and have the average cost of living, then, the IRS may allow you to file as not collectible. If you are successful in the filing, then, you will still owe the debt and accrue interest and late payment penalties, but you will not have to pay back the IRS while you are suffering your hardship. This status can last indefinitely, unless, you show an increase in come. At that time you will be taken out of your CNC status if you are showing more income than what the IRS believes is indigent status.

In order to file this status, you will need to have all of your tax returns filed – compliant. This is a precursor to filing for the CNC status. Remember, if you wait at least 3 years from the date of the last tax return’s assessment, then, you can actually file for Chapter 7 bankruptcy and wipe the slate clean. The 3/2 rule basically means that three years after filing a tax return that was due at least two years ago allows you to liquidate the debt in a Chapter 7 bankruptcy.

My personal take: ¬†We have such tools available, but don’t ruin yourself in the process by working minimally or not even working at all to avoid paying your taxes. You are far better off in the long run working, getting a promotion, or running a business for 3 years while trying to pay off your taxes after an offer in compromise.