Currently Not Collectible Status

There are times where you agree with the IRS that you owe taxes, but you can’t pay due to your current financial situation. If the IRS agrees that you can’t both pay your taxes and your reasonable living expenses, it may place your account in Currently Not Collectible (CNC) (hardship) status.

While your account is in CNC status, the IRS will not generally engage in collection activity.  For example: It won’t levy on your assets and income. However, the IRS will still charge interest and penalties to your account, and may keep your refunds and apply them to your debt. 

Before the IRS will place your account in CNC status, it may ask you to file any delinquent tax returns.

If you request CNC status, the IRS may ask you to provide financial information, including your income and expenses, and whether you can sell any assets or get a loan.

If your account is placed in CNC status, during the time it can collect the debt the IRS may review your income annually to see if your situation has improved . Generally, the IRS can attempt to collect your taxes up to 10 years from the date they were assessed, though the 10-year period is suspended in certain cases. The time the suspension is in effect will extend the time the IRS has to collect the tax.

Because the IRS won’t suspend interest and penalty charges, even if it stops trying to collect the balance due, you may want to consider other possible payment options within your means before asking the IRS to place your account in CNC status.

Source: IRS Taxpayer Advocate Services

Disaster Perparedness

The Internal Revenue Service today offered advice to taxpayers who may be affected by storms or other natural disasters. The IRS also reminded taxpayers that the agency is here to help including offering a special toll-free number to taxpayers in federally-declared disaster areas, staffed with IRS specialists trained to handle disaster-related issues.

Don’t Forget to Update Emergency Plans
Because a disaster can strike any time, be sure to review emergency plans annually. Personal and business situations change over time as do preparedness needs.

Create Electronic Copies of Key Documents
Taxpayers can help themselves by keeping a duplicate set of key documents including bank statements, tax returns, identifications and insurance policies in a safe place such as a waterproof container and away from the original set.

Document Valuables
It’s a good idea to photograph or videotape the contents of any home, especially items of higher value. Documenting these items ahead of time will make it easier to   quickly claim any available insurance and tax benefits after the disaster strikes

Check on Fiduciary Bonds
Employers who use payroll service providers should ask the provider if it has a fiduciary bond in place. The bond could protect the employer in the event of default by the payroll service provider.

In the case of a federally declared disaster, an affected taxpayer can call 1-866-562-5227 to speak with an IRS specialist trained to handle disaster-related issues.

Courtesy of IRS

For more information contact Neikirk, Mahoney and Smith at 502-896-2999