IRS Hardship Status -- "Currently Not Collectable" What Does It Really Mean?

Resolution of a debt to the IRS can be accomplishedTV, cell phone, country club or health club dues, and
by different methods; the obvious one is full payment. Ifcredit cards will not be factored in when calculating
one cannot full pay or believes the debt is bogus, otheryour qualifications for CNC. These items are
means are available. Installment Agreements may beconsidered unnecessary by IRS. Under the law, IRS is
negotiated. Abatements are possible if reasonablea senior creditor to most debts.
cause can be established. Filing corrected returns mayWhen you call the IRS, be ready to give them a
be an option. The Offer-in-Compromise is available ifcomplete budget and fax or mail them the proof of
one qualifies. However, if one cannot pay or qualify foryour situation. At you can download Form 433F. This
another program; the temporary hardship or "Currentlyform will help you organize your budget in a format
Not Collectable" (CNC) may be an intermediateIRS accepts. In some cases, you may need to fill out
resolution. It is likely not a "final" resolution.Form 433A & 433B. If you call them unprepared,
If you owe the IRS a large sum of money but do notyou may get placed into a payment plan you cannot
have the ability to make payments on the debt rightafford. Even with proof, the IRS has established
now, you might qualify for a hardship. The CNC"national standards" for many items and you will not be
program is not new, but qualification for it is very tough.allowed costs in excess of that amount in many
Getting your account placed in hardship is notcases.
guaranteed to be permanent. In fact, it likely will onlyIf your account is placed in a hardship CNC, you still
last 18-24 months. However, it might give you time toowe the taxes, they continue to accrue interest,
get back on your feet so that you can makerefunds will be kept, and a Federal Tax Lien may be
payments later. In rare cases, a hardship may remainfiled. You will not be required to make individual
until the taxes expire, but don't count on it!payments while the case is in CNC. No bank levy or
In order to qualify for suspension of collection activitywage levy will occur while in CNC. However, unless
on your account by IRS, you must have at least thethe Statute of Limitations blows, the tax will go back to
last 6 years tax returns filed. You must also be inIRS Collections at some point.
current tax compliance. This means that you mustShould your IRS debt exceed $25,000, please get
have correct tax withholding at your job or be makingprofessional help. A good CPA, Enrolled Agent or Tax
proper Estimated Tax Payments if self-employed. InAttorney can help you deal with IRS. The fees you
addition, you must be able to prove that yourpay will be well spent if you hire a competent and
necessary living expenses meet or exceed yourexperienced professional. If you cannot afford
current income. Furthermore, you must not have anyprofessional help, the IRS has free help in the form of
substantial "liquid assets." Liquid assets are things likethe Appeals Office and the Taxpayer Advocate
bank accounts with large cash balances, moneyService. If you feel that you are not being treated fairly,
market funds, stocks, CDs, or un-borrowed funds inyou can file an administrative appeal or a Form 911
cash value in life insurance etc.with the Advocate.
You will be required to provide 3-6 monthsThe IRS can be reached at 1-800-829-1040 for
documentation on proof of income and expenses (bills).general questions. The IRS Automated Collection
If you have medical expenses, get proof of them asService can be reached at 1-800-829-7650. The
well. You may be required to provide car noteTaxpayer Advocate Service phone is
information as well as rent or mortgage proof. Cable1-877-777-4778 or TTY/TTD: 1-800-829-4059.