What Does an IRS Currently Not Collectible Status Mean for You?
In 2013, the IRS wrote off 16.1 billion in tax debt. While this number is impressive, that doesn’t mean the IRS is lax in collecting taxes. The IRS is relentless when it goes after taxes.
The IRS can levy your property, checking, savings and garnish your wages. With all of these things coming down on your head, it can feel like you’re drowning in the ocean.
One of the ways you may be able to survive is by getting into a currently not collectible status. CNC status will allow you to keep from going bankrupt or living in a way that is undesirable. Continue reading this article to learn more about what this status means to you.
JYour Tax Debt is Currently Not Collectible
If you see an IRS currently not collectible status, what does that mean to you? Are you off the hook for your mountain of tax debt? Unfortunately, that is not what the CNC status means, but here is what it does mean to you.
The main part of this phrase you need to focus on is the “currently” part. The CNC status means the IRS thinks your current financial situation won’t allow you to pay your taxes. This is only a temporary status so don’t get too comfortable when you see this phrase used in your case.
Interestingly enough, while CNC status is temporary, it can last for an indefinite time period. Since this status can last for an indefinite time period that means that you may be able to keep from paying your back taxes.
The IRS will monitor your w-2s each year you file taxes. When the IRS sees how much money you have made that year if your income hasn’t gone up 15-20% you are likely to keep the status. You can learn more about CNC by visiting the IRS website.
You should also know that you are not exempt from paying your current year taxes. If you have CNC status for 2014-2015, but it is the year after that, you don’t have to pay 2014-2015, but you still have to keep current on all of the other years.
Before you call the IRS to ask to change your status, you need to make sure you qualify. What you may think is a normal living expense may not be considered a normal living expense to the IRS.
If you aren’t sure if you qualify for this status, do more research or speak to a professional to help you through the issues. You don’t want to go to the IRS until you know you’ll be approved for the status.
When you do get approved for the status, if you don’t keep to date on your current taxes, the full force of the IRS will come down on you. Levies, garnishments, seizures and other means of collections will come from the IRS.
What Actions Should You Take?
When you learn about the different options you have when you have back taxes, it may seem there are no good options. Getting CNC status may seem like the best option for you but make sure you know what the rules are around this status.
When you are going through this process, you need to make sure that you file all of your taxes. If you don’t file your taxes because you want to avoid paying them, the IRS may file them for you. If the IRS files your taxes for you, they may end up showing higher taxes than you would have shown if you had filed.
Hiding from tax debt is not a good strategy. The IRS has ten years to collect on back taxes before the statute of limitations is up.
When you are experiencing tax debt problems, you need to stay on top of the matter and in communication. The IRS has the ability to levy your bank account and require your bank to transfer all funds to the IRS within 24 hours.
Make sure you have some cash on hand, so you are able to buy food and other necessities in case of an IRS levy or other collection practices. If you don’t have money to buy gas to get to work, you will be in an even worse situation.
While the thought of paying the IRS all of the money you owe them might not be exciting, if you get your tax situation under control, life can get back to normal. Put a plan together and start working toward resolving your tax problems.
What Can You Expect Next?
Whether you’re trying to buy a new house, start a new business or get credit for some other reason, having tax debt can put a damper on it. Many people are not able to get any sort of financing when there is an outstanding tax debt on their credit report.
Unless you want to go bankrupt, you won’t be able to get a tax debt to go away. There are only certain types of bankruptcy that allow you to get out of paying a tax debt. Some bankruptcy still requires that you pay your tax debt in installments.
It is possible to bring yourself back from a heavy tax burden. There are many people that have been able to pull themselves out of debt, but often it required professional help. If you try to go up against the IRS without knowing what you’re doing, you are sure to experience more problems than you ever wanted to deal with.
Keep Your Finances In Tact
As you’re learning about currently not collectible status with the IRS and other tax related terms, further financial education can help you stay out of trouble. Failing to invest time learning about how to keep your money right may result in even more trouble in the future.
Don’t worry about your financial future anymore. Learn more about how to take care of your finances in our article about 5 ways to save money and invest wisely.