Unemployment claims increased sharply in January, 2021, with COVID surges prompting additional lockdown measures and accompanying economic instability. In the midst of all this financial distress, many people are also worried about the looming threat of tax season.
If you anticipate that you’ll owe the IRS for 2020, it’s time to take a closer look at your options. You may be eligible for currently not collectible (CNC) status, but should you take advantage of it? Keep reading to find out.
Disclosing Financial Information to the IRS
The designation of CNC status has largely remained the same before and during the pandemic. At this point, the economic uncertainty of COVID alone will not automatically qualify you for delayed collections. If, however, the pandemic has caused you to lose your job or otherwise suffer significant economic distress, you’ll have the opportunity to demonstrate your financial problems by completing IRS Form 433 — the Collection Information Statement.
More Flexibility During COVID
While the process for obtaining CNC status largely looks the same, the IRS appears to have relaxed its standards at least somewhat in light of the pandemic. A November, 2020 notice from Deputy Commissioner Darren Guillot promises greater flexibility, with taxpayers encouraged to take advantage not only of the CNC program, but also, of first-time penalty abatement and extended timeframes for short-term payment plans.
This is a great time to pursue the many options provided by the IRS, but as always, you’ll find it easier to achieve a positive outcome when a tax resolution specialist advocates on your behalf.
At the Highland Tax Group, we’re familiar with the many scenarios that lead to CNC designation. We can help you halt IRS collections if needed, or, if you prefer, offer guidance for alternatives such as offers in compromise or installment agreements. Contact us today to discuss your options.