You’ve just lost your job, and your financial obligations are piling up fast. You need to prioritize what’s getting paid and what gets pushed aside. While your mortgage or rent is probably at the top of the list, your IRS repayment plan is probably not, and understandably so. While it may not be at the forefront of your mind, ignoring the IRS is a bad idea.
At Highland Tax Group, our experienced tax professionals understand the challenges you’re facing. We’re here to ease your stress by helping you pursue a plan with the IRS—so your tax issues don’t escalate further.
Revise Your Payment Plan Agreement
While you may not be able to make your full payments, if you can make partial payments, the IRS may revise your payment plan (also known as an installment agreement). The revised payment plan would allow you to make a partial payment without accruing penalties or falling out of good standing. Any payment is better than nothing to stay in the IRS’s good graces.
Request Temporary Hardship Status
If you can’t make your payments but expect your financial situation to improve shortly, you may be eligible for Temporary Hardship Status. The IRS isn’t going to take your word on your current financial situation. To prove your current financial hardship, you will need to provide financial information, such as Form 433-A or 433-F.
This isn’t a long-term solution – it’s an informal and temporary agreement where the IRS doesn’t require you to make a payment. During this time, interest and penalties will accrue, but you won’t be in default.
Switch to Currently Not Collectable (CNC) Status
Currently, Not Collectable Status is similar to Temporary Hardship Status, except that it is a long-term status. Usually, your account can be placed on CNC status for one to two years. For the CNC status, you will need to provide Form 433-A or 433-F, which shows that you cannot afford to make payments considering your allowable expenses (i.e., basic living expenses).
There are pros and cons to each of these options, and each comes with its own administrative requirements. The experienced tax professionals at Highland Tax Group can help you decide which plan works best for you and how to pursue that option with as little headache as possible.