If a taxpayer does not qualify for an Offer in Compromise and cannot afford to pay an Installment Agreement, Currently not Collectible (CNC) status may be an option.
If a client is placed in CNC status, the statute of limitations continues to run and the IRS will not pursue collection actions. However, If a taxpayer’s financial status improves, the IRS can remove the file from CNC status and return to active collection status.
Reasons for attempting CNC status:
- Taxpayer has more allowable expenses than income and there is no indication that the financial situation will improve in the future otherwise known as a hardship status.
- Due to high equity (fair market value of real estate is greater than mortgage), the taxpayer does not qualify for an Offer in Compromise and has more allowable expenses than income so an Offer in Compromise and an Installment Agreement are not options.
- Taxpayer has more allowable expenses than income and the statute of limitations is getting close to expiring.
The IRS has 10 years to collect a delinquent tax liability. The statutory period begins with the date of assessment of the tax and ends 10 years later. If this collection statute date expires, there is a chance that you are free and clear of your IRS tax obligations.
Statute of Limitations on IRS debt can, however, be extended or amended in several instances; including a pending Offer in Compromise, Tax Court proceedings, a taxpayer’s waiver, or numerous other instances like bankruptcy and taxpayer approval.
If you believe that your tax liability is approaching, or is over the 10 year Statute of Limitations period, call one of our tax specialists to discuss your options and if you have the possibility of allowing your tax liability to expire.
Call us at 1-888-770-9570 and we will assess what you’re qualified for.