I heard an advertisement while driving into work today. “Call us if you can’t afford to pay the IRS…The new CNC program can help”. Many taxpayers are calling and may not even know what the CNC program stands for. I thought that an explanation would make for a good post.
CNC or Currently Not Collectible Status is a program used to temporarily resolve tax problems for low income individuals. This means the IRS must stop collection tactics and leave your case alone for a while. However, if your income changes or your file comes up for review, the IRS can come back to collect. CNC is a good program when used as a tool along with other legal measures to resolve past due taxes. I feel it is unfair to let taxpayers think CNC is a permanent fix and works for everyone. Like Offer in Compromise, only a small number of people actually qualify for CNC.
Questions to ask before pursuing CNC:
- Does repayment of the taxes cause a true economic hardship?
- Can the IRS legitimately obtain funds from you to pay the debt?
- Can you afford your living expenses along with a payment to the IRS?
- Do you really understand the difference between true hardship and a personal inconvenience?
- Are you withholding enough income from your W2 but still owe back taxes?
- Have you become compliant by filing all necessary tax returns?
- Are you current in paying estimated payments?
- Do you have the documents to back up your lack of income?
- Do you anticipate your income increasing in the near future?
All of these are very important questions that you or your representative must be sure to ask. Please be wary of companies offering limited time, pay less than you owe, too good to be true programs. CNC is not a limited time program as it has been around for a very long time. As always, be careful who you trust to represent you and speak on your behalf to the IRS. If at any time you have questions or need advice, please feel free to reach out to me at 410-727-6006.