Depending on your unique facts and circumstances you will be able to qualify for 1 of 3 IRS tax resolution programs:
Currently Not Collectible
The Internal Revenue Service (IRS) will place a taxpayer’s account in a Currently Not Collectible (CNC) status when they have determined that the IRS is presently unable to collect the taxes from the taxpayer by full payment, through an Installment Agreement or by way of an Offer In Compromise. Once the account is placed in a Currently Not Collectible status, the IRS does not pursue collection activity against the taxpayer and the statute of limitations on the tax liabilities will continue to run. Generally, unless the taxpayer’s financial situation changes, the account will remain in a Currently Not Collectible status until the tax liabilities expire. However, if the taxpayer’s financial situation improves the account will be taken off of Currently Not Collectible status so that the IRS can collect the taxes through full payment or an Installment Agreement.
An Installment Agreement with the IRS allows taxpayers that cannot afford to full pay their back tax liability the option to pay their back taxes through monthly payments. There are guidelines regarding how the IRS determines the payment amount and time frame for the agreement. Additionally, a taxpayer must be compliant with all past tax filings before establishing the agreement. Depending on the circumstances and the amount of time that the IRS has left to collect the tax debt, the Installment Agreement may pay all or part of the back tax liability. Unfortunately for many taxpayers, they end up with monthly payments greater than they can reasonably afford causing them a financial hardship. In many situations like this, the taxpayers end up defaulting on their Installment Agreement causing the IRS to begin collection activity all over again. Therefore, it is important to have an affordable Installment Agreement established properly the first time.
Offer In Compromise
An IRS Offer in Compromise with the IRS allows taxpayers that cannot afford to full pay their back tax liability the opportunity to settle their tax debt for less money than what they owe. If you qualify, an Offer in Compromise can reduce IRS debt and save you thousands of dollars!
The IRS sets guidelines for accepting an Offer in Compromise. The IRS looks at a taxpayer’s past, current and future financial situation when evaluating whether an Offer in Compromise should be accepted. It is important to know what aspects of a taxpayer’s situation the IRS is looking at when filing an Offer in Compromise. Not everyone qualifies for an IRS Offer in Compromise, as each person’s financial situation is different. Additionally, the length of time varies but the average time it takes is generally is 9 to 12 months.
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At Daniel Henn, CPA, PA, we believe that your certified public accountant should inspire comfort and confidence that all of your tax related maters are being resolved. If you need help, Dan offers a FREE Strategy Session to personally evaluate your specific tax situation, obtain all relevant information necessary, and recommend the best course of action for your personal scenario.
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