IRS Hardship: Getting Put into Currently Not Collectible Status
Sometimes taxpayers come across unforeseen financial events and it puts them in a situation where they are simply not able to pay the IRS the taxes that are owed. The IRS understands that this happens and has the power to declare an individual Currently not Collectible if a taxpayer can prove to the IRS that the collection of the tax would cause financial hardship. Once the IRS hardship is approved, then your hardship will temporarily stop collections. The IRS will follow up 12 to 18 months later to see your financial situation has improved enough in order to start collections again. An IRS hardship won’t solve your tax problem entirely but it will buy you more time to deal with it.
FLAT FEE TAX SERVICE, INC. RECOMMENDS AN IRS HARDSHIP FOR THOSE WHO OWE LESS THAN $10,000.
FOR TAXPAYERS WHO OWE $10,000 OR MORE,
OUR IRS TAX LAWYERS RECOMMEND
AN OFFER IN COMPROMISE.
How to be Declared Currently Not Collectible by Proving Your IRS Hardship
Filing for an IRS Hardship and Being Declared Currently not Collectible
When filing for the Currently not Collectible status you will be required to fill out detailed IRS forms as well as provide detailed information about your financial situation. It is important to provide the IRS with enough information to prove that you do not have the means to pay taxes owed and it would be to their benefit to stop collections and allow you more time.
IRS Hardship/Currently not Collectible Status Frequently Asked Questions
Q: What are other names of IRS Hardship?
A: You may hear many different names for IRS hardship and they all basically mean the same thing. The different names are the following: IRS Uncollectible Status, Status 53, Currently not Collectible and CNC Status.
Q: Does a CNC or Currently Not Collectible Extend the Statute of Limitations?
A: Nope. However, interest and penalties continue to accrue.
Q: What are the monthly amounts for a two-person household when considering someone for IRS hardship status (2017)?
$612 for food
$138 for apparel and service
$65 for housekeeping supplies
$63 for personal care and services
$254 for miscellaneous expenses
$49 for Under 65 Health Care and $117 for over 65
$189 for Public Transportation, $485 for ownership costs of one car, $970 for two cars
Note: National standards vary by household size. Find out more here.
Local standards include monthly allotments for housing, utilities, and transportation operating costs by region. In other words, these expenses are based on where you live in the country. Housing and utilities are based at the county level, whereas car operation costs are based at the regional level.
Monthly allowance for the operation of cars based on region of the country
Monthly allowance for housing and utilities set at the county level
Q: Where can I find detailed amounts the IRS uses for common necessities?
National Standards Food, Clothing, and Other Items
National Standards: Out-of-Pocket Health Care Expenses
Local Standards: Housing and Utilities
Local Standards: Transportation
Q: Is there a specific form to file for IRS Hardship?
A: No, there is not a specific form that can be used to file for an IRS hardship. You will need to work with the IRS and ask them to be considered for Currently Not Collectible status. In order to be considered, you will be required to prove that the collection of the tax would cause financial hardship and they will require you to fill out IRS form 433-F which will be detailed financial information about you. They will also require detailed information about your monthly expenses.
Q: If I am declared Currently not Collectible will I ever have to pay the IRS?
A: Only if your financial earnings significantly improve. When you are declared Currently not Collectible, it is only temporary and the IRS will check your tax returns every 2 years. There are some cases where someone can remain on Currently not Collectible status for so long that the statute of limitations expires on your tax debt and the IRS legally do not have to pay it anymore.
Q: Are there other options I should consider before trying for an IRS Hardship?
A: Yes, you should consider other options before trying to be declared uncollectible because a Currently Not Collectible Status or IRS hardship generally comes with a federal tax lien. If you own property and have no intention to sell your property, then a tax lien will have no effect. If you have poor credit, then a federal tax lien will have little to no effect on you.
YOU HAVE THE DECISION TO MAKE. IS IT BETTER TO KEEP WHAT LITTLE MONEY YOU HAVE, OR, MAKE PAYMENTS TO THE IRS?
If you can make a small monthly payment of the debt owed it is possible that you may qualify for an installment agreement. If you can make the required payments with an installment agreement without causing financial hardship to yourself then it is likely you will be denied hardship status. If you are a good candidate for IRS hardship it is also a possibility that you may qualify for an Offer in Compromise. With an Offer in Compromise, you can settle the taxes you owe for less.