If you’ve recently lost work due to the COVID-19 pandemic, you’re not alone. Millions of Americans across the United States applied for unemployment in the last month, according to the latest statistics—and the number is likely to skyrocket even further. Amidst a very real health crisis comes a very real financial crisis. It threatens to put a bind on hardworking taxpayers now struggling with unemployment due to COVID layoffs and wage loss. That’s why we want to discuss one measure of coronavirus tax relief: Currently Not Collectible Status.
Throughout the month of March, we’ve kept an eye on the devastating progression of COVID-19 around the world. Additionally, we’ve paid close attention to the actions of President Trump, Congress, and the Department of the Treasury.
We’ve followed along and provided comprehensive updates to ensure you understand the comprehensive coronavirus tax relief measures being enacted by the government to help you weather the worsening financial storm. Along with the many new actions being taken by the IRS, a number of current IRS programs can help you achieve tax debt relief.
If you’ve been laid off due to the coronavirus, you can achieve tax relief from the IRS through Currently Not Collectible status.
We’re here to provide a brief overview of Currently Not Collectible (CNC) status. We’ll explain how it works and why today is the right time to apply.
In many ways, CNC status is a last resort for taxpayers saddled with tax debt they simply can’t pay.
When you’re dealing with the IRS, the tax debt itself isn’t your only concern. You’re also worried about penalties and fees, tax liens and levies, wage garnishments, and bankruptcy. However, in some cases, even setting up a payment plan provides challenges of its own. Regardless of whether you’re between jobs or money’s just tight at home, you don’t always have the means to cover your tax debt or start the process of getting it squared away.
In these cases, you can apply for CNC status, which essentially tells the IRS you don’t have the means to pay your debt. Should the IRS determine your account is currently not collectible, they will temporarily cease their enforcement and collection attempts.
The IRS will always try to collect a tax debt, and they’ll move mountains to get their money. They can garnish your wages, place a tax lien on your house and even levy it, and they can turn your account over to a private collection agency. But in some cases, they may determine the balance of the debt simply doesn’t outweigh the costs of collecting it.
Not everyone gets approved for CNC status; it’s reserved for financially difficult situations. Really, your application indicates you have no way of paying your tax debt back. It might be a combination of your current income, real estate, businesses, assets, the whole nine yards. It’s a comprehensive form.
First and foremost, you’ll need to fill out and file the IRS Form 433-A, Collection Information for Wage Earners and Self-Employed Individuals. You’ll need to provide the IRS with a hefty amount of information. They’ll need to see your assets, wages, even spending habits and healthcare costs over a period of time.
Ultimately, your CNC application will indicate that even if you tried, you wouldn’t be able to pay your debt. You could scrimp, save, and liquidate your assets, but the money’s just not there.
While CNC status requires a lot of organization, effort, and forethought, it can be well worth it to providing you the tax relief you need when you’re experiencing a financial hardship. Having your account listed as currently not collectible doesn’t erase your tax debt. However, it does press pause on IRS collections. And it just may give you the break you need, right when you need it most.
As if the risk of a public health crisis wasn’t enough, millions of people have lost work, savings, and livelihoods at the foot of coronavirus. And if you were working to pay off a current tax debt, you don’t deserve any more stress or worry. Fortunately, a loss of income through layoffs, unemployment, or forced reduction in hours can offer you tax relief.
We’ve helped thousands of hardworking people apply for currently not collectible status and other tax relief plans through the IRS. We can help you navigate your tax debt situation, achieve IRS tax relief, and get back to focusing on your family’s wellness in the coming months. If you want to talk, just send us a message on our free live chat—and let’s get started today.
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