Currently Non-Collectible Status and exactly what it implies.
This is the page that the IRS does not desire you to see.
You’re Broke!! They cannot get blood from a stone! You don’t have any cash and the IRS can not get something from you that you do not have. Simple!
By being broke, the IRS will be forced by law to put you on a Currently Non-Collectible Status. Broke means simply that. You actually have absolutely nothing to your name. No home or no equity in your home, no savings, no financial investments and not much cash from your work or retirement. This is generally helpful for a year or 2 and then the IRS will re-evaluate from time to time. They have 10 years and if you remain in CNC for that time, the IRS has to forgive your whole debt amount. ALL OF IT !!
So how does this Currently Not Collectible program work?
An individual may be considered to be Currently Not Collectible if he satisfies the following:
If he does not have any assets, for the IRS to levy taxes.
If he doesn’t have a stable income or suggests to pay the taxes owed.
If the income of the tax payer is less than the minimum that is required to satisfy his fundamental living costs.
When a person is thought about as Currently Not Collectible, all the taxes imposed on him get momentarily suspended. Even if an individual is considered to be Currently Not Collectible, she or he is still accountable to pay the money owed and the interest accumulated.
The financial status of Currently Not Collectible individual is kept an eye on, so that he can return to pay taxes as soon as he gets back on track. This is done once in a year, and the IRS also demands the tax payer to send out a copy of his tax returns so that they can compare and see that everything matches. This is the factor why the returns need to be precise without any mistakes in them.
However the story is not over yet. There is yet another option for the tax payers to be preferred by the IRS. If the individual continues to have really less income and to be in the Currently Not Collectible status for a period of 10 years, the IRS is liable to remove all the taxes he owes.
Simply puts, the tax payer does not have to pay any taxes or charges that had actually been levied on him up until now.
So if this is actually your scenario, being proclaimed Currently Non-Collectible is a fantastic choice for some home owner. If you are getting close to the time that the statute of constraints goes out, your Revenue Officer might get more aggressive and aim to get you to sign something. Please do not be deceived by this.