To determine if you are eligible to take advantage of an IRS currently not collectible status, it’s essential to review your financial situation to determine your expected monthly living expenses and your anticipated gross receipts over the next 12 months. Once you have determined what your financial position is, you can begin to analyze your tax situation to see what deductions you’re eligible to take. You will probably want to start by reviewing your bank statements and your federal tax return. Most people can deduct interest paid to a traditional bank over the past year, as long as that amount is above the threshold for personal bank loans. You may also be able to deduct your mortgage interest, if you have been paying on your home in the past three years.
If you do not have an installment agreement, then you probably won’t be eligible for an IRS currently not collectible status. If you do not have an installment agreement, then you should still try to determine if you owe money to the IRS. In most cases, the IRS holds an automatic stay that prohibits collection efforts until the debt is repaid. A CNC status can be considered contingent upon the debtor paying the debt.
If you do owe taxes, and you think an IRS currently not collectible status may help you avoid having your tax debts sent to the IRS, you should contact a certified public accountant to obtain a tax debt expert opinion. Certified public accountants (CPA) can assess your financial situation and recommend the best options for minimizing your tax liability. A tax expert can advise you about whether you need to repay a CNC status which could reduce your monthly installment. In addition, they can assist you with determining if you qualify for tax relief programs based on your CNC status and income level.
You should also make it clear whether you are able to pay more than the amount of money you currently owe to the IRS for your an IRS currently not collectible status. If you have other debts that are higher than the amount of money you have to repay, it makes sense to pay those expenses before you consider CNC status. For example, if you owe a mortgage but have a smaller mortgage payment than usual, then you might not want to include that income in your CNC status calculations. On the other hand, if you have high expenses and you cannot reduce them much because your mortgage payment is so low, then you should consider including those expenses in your calculations.
A number of taxpayers find that CNC status, combined with a modest income tax payment, can help them to alleviate some of their financial hardship. Unfortunately, many taxpayers remain uncertain about the tax benefits related to CNC status and continue to struggle with collection efforts. The majority of tax professionals and tax law firms recognize that CNC status is not a tax benefit that is available to all taxpayers. Only individuals with extreme financial hardship will receive assistance from the IRS with collection efforts. Those taxpayers who meet the other eligibility requirements can expect to receive reasonable compensation from the IRS as a result of their unavoidable collection circumstances.
If you’re looking to apply for IRS CNC Status then there are some important things you have to do. First, you have to file any and all federal tax returns for the past year that you’re required to file, then you have to maintain these forms on a monthly basis. This means that even if you’re able to pay the taxes eventually, you still have to keep filing these returns.
It’s important that any tax debt, which is reported on a federal form called Schedule A, be paid off. This means that any money owed to the IRS must be repaid. The only exception to this is if a tax debtor has more than one type of tax debt (such as state income, gifts, child support, etc.).
All taxpayers that owe the IRS money must make payments (known as tax payments) either in a lump sum or via installment. If they choose to make their payment in a lump sum then they’ll have to pay that amount all at once. Both options will give tax relief, so it’s always a good idea to work on paying off all of your debt as quickly as possible. However, if a taxpayer is unable to pay their taxes in a timely manner then they may still receive a notice of deficiency. If a taxpayer receives this notice then they can request an appeal with the IRS.
If a taxpayer has previously received IRS CNC status then it’s likely that they will qualify for an increase in their qualifying amount again this year. The increase is based on how much the taxpayer earns and pays in each year since they became qualified for status in previous years. Before becoming CNC certified it was necessary for taxpayers to wait five years before they could apply for tax relief. Now, anyone who met the requirements for previous years automatically qualifies.
The biggest benefit of being a tax collector with IRS CNC status is that they are not limited to collections. They can help settle debts and collect other types of assets. It’s up to the taxpayer, whether or not they want to let go of collecting these types of assets. In some cases, it may make more sense financially for a collector to hold onto a collection instead of investing it into a more lucrative investment opportunity.
There is one more benefit to having CNC status as opposed to private collections. The IRS is not allowed to obtain a tax debt certification unless the individual has paid all the back taxes. If an individual has an outstanding balance that the government is unable to collect, they still have the option to request an audit certification. There are many ways to manage seemingly unbearable tax debts, and this is one of them.
Why Taxes? Why Now?
"We opened up shop here in the Wylie, Sachse, Murphy area in 2018 with a passion to help start-ups and small businesses get on top of their bookkeeping,” Allen explains.
“What we found was a lot of folks just don’t get the tax game. And now that there are new laws and regulations, many are starting to panic; but trust me, small businesses have everything to gain with the new Section 179 Deductions.
“After filing a few late returns, in that first year, we learned that there is a real need for some tax expertise. We spent a good part of 2018 getting up to speed on tax law, and now I am an Enrolled Agent, federally licensed to practice before the IRS on behalf of my clients and anyone else who may be facing the daunting ‘IRS boogie man.’
“During tax season, we are prepared to handle it all.
For individuals we have helped folks with past-due tax returns and work with the IRS to eliminate all penalties... sometimes we given get rid of the tax debt itself.
For companies the biggest problem businesses of all sizes have is filing and paying their payroll taxes - both state and federal - on time. The rules for 940s and 941s are extremely confusing so we have helped a lot of companies catch up.
If they like our work, they sometimes retain us for bookkeeping and payroll.
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