"Did You Know?" #6

DID YOU KNOW you can have your account placed in Currently Not Collectible status to pause collections if you are facing financial hardship?

The IRS allows you to place your account into Currently Not Collectible (CNC) if you can’t meet your basic living needs and you don’t have any assets to pay the balance. The IRS will want to go through your financial information to determine if you’re eligible. They will ask for your income (including alimony, child support, disability, social security, 1099, and W-2) and what you pay every month for rent or mortgage, car payments, food, utilities, health insurance, and medical expenses. They will also ask you to list the assets you own. There are predetermined “standards” for food, personal care, clothing, and car or public transportation expenses, so you won’t need to calculate those items. The IRS will use those standards unless you can prove your expenses exceed those amounts. Some other types of monthly payments they will consider are child care, estimated tax payments, student loans, and child support.

If your allowable expenses are greater than your income and you don’t have sufficient assets to use to pay your tax bill, they can mark your account as “currently not collectible due to hardship” which will stop the IRS from trying to collect from you. This is not permanent. They will review the information every year or two when you file your tax return. If they see an increase in income, they can remove this status and begin collection efforts. It also doesn’t stop the accrual of interest and penalties. But it can stop the IRS from garnishing your wages or bank accounts and stop them from sending your balance to private debt collection. If your financial situation doesn’t improve, you can stay in CNC indefinitely.