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

News of Note - Supreme Court Decision On Obamacare

Supreme Court Decision – the New York Times Opinion
The Times called the decision confusing in an OpEd contributed by Richard Epstein, who said “It is not good for the court or the country that the chief justice’s position in such an important case is confused at its core.” Read more

Supreme Court Decision – the Wall Street Journal Opinion
“It's also hard not to notice that people now extolling Justice Roberts for rescuing the court's integrity are largely the same ones who have been impugning it,” the Journal said. Read more

Supreme Court Decision – the Journal of Accountancy
“Roberts concluded that the individual mandate must be construed as imposing a tax on those who do not have health insurance, if such a construction is reasonable, because "every reasonable construction must be resorted to, in order to save a statute from unconstitutionality," Hooper v. California, 155 U.S. 648 (1895).” Read more

So You Think You Have Problems?

The Tax 'Miseducation' of Lauryn Hill
Singer and actress Lauryn Hill, who captured five Grammy awards for her critically acclaimed 1998 album The Miseducation of Lauryn Hill, has been charged with failing to pay taxes on income totaling $1.8 million. Read more

IRS Prescribes Rules for Health Care FSAs
A new IRS ruling (Notice 2012-40) provides guidance on a pending limit for flexible spending accounts (FSAs). Read more

Is Your Business Headed in the Right Direction? Are You Sure?

If you're like most business owners, your days are filled by efforts to make your company successful. Those tasks might be focused on making a great product, generating sales, or building customer relationships. And you might be great at those things. But how great are you at making money? And how well are you managing your resources? Click here to read more.

Questions? Contact us at Neikirk, Mahoney & Smith CPAs.