Currently Non-Collectible Status and what it means.
This is the page that the IRS does not desire you to see.
You’re Broke!! They cannot get blood from a stone! You do not have any money and the IRS can not get something from you that you do not have. Easy!
By being broke, the IRS will be forced by law to put you on a Currently Non-Collectible Status. Broke implies just that. You actually have nothing to your name. No house or no equity in your house, no savings, no investments and not much money from your employment or retirement. This is usually helpful for a year or more then the IRS will re-evaluate from time to time. They have 10 years and if you stay 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 might be thought about to be Currently Not Collectible if he fulfills the following:
If he does not have any possessions, for the IRS to impose taxes.
If he doesn’t have a steady earnings or means to pay the taxes owed.
If the earnings of the tax payer is less than the minimum that is required to fulfill his fundamental living expenditures.
When a person is thought about as Currently Not Collectible, all the taxes levied on him get temporarily suspended. Even if an individual is thought about to be Currently Not Collectible, she or he is still liable to pay the cash owed and the interest accrued.
The financial status of Currently Not Collectible individual is kept track of, so that he can get back to pay taxes once he returns on track. This is done when in a year, and the IRS also requires the tax payer to send a copy of his income tax return so that they can compare and see that everything matches. This is the reason that the returns need to be precise with no mistakes in them.
But the story is not over yet. There is yet another choice for the tax payers to be favored by the IRS. If the individual continues to have really less earnings and to be in the Currently Not Collectible status for a period of 10 years, the IRS is responsible to remove all the taxes he owes.
In other words, the tax payer does not need to pay any taxes or penalties that had actually been imposed on him up until now.
So if this is really your circumstance, being declared Currently Non-Collectible is a fantastic option for some home owner. If you are getting near the time that the statute of constraints runs out, your Revenue Officer may get more aggressive and attempt to get you to sign something. Please do not be deceived by this.