When you are overwhelmed by your tax debt, it can be challenging to determine the best way forward, but there are IRS programs that may help, such as the IRS Offer in Compromise or Non Collectible. With an Offer in Compromise (OIC), you negotiate a reduced amount for a specific tax debt and a payment plan with the IRS, while Currently Not Collectible (CNC) status offers temporary relief from paying any tax debt but does not change the amounts owed. In both cases, under somewhat different guidelines, interest and penalties continue to accrue, but the IRS does not pursue collections.
Offer in Compromise (OIC)
Taxpayers who want to challenge the amount of a specific tax debt and pay a reduced amount, either because they dispute the amount owed or cannot afford to pay it, should explore the OIC option. Those who qualify submit a packet that includes a form identifying the reduced amount they want to pay, the reason, and the proposed payment schedule; a form with their financial information; and supporting documentation. The IRS reviews their application, and if it is accepted, the taxpayer pays the agreed-upon amount.
Currently Not Collectible (CNC) Status
Taxpayers facing extreme financial hardship to the point where they cannot pay any part of their tax debt for the foreseeable future can apply to temporarily delay the collection process by contacting the IRS by phone. The IRS may require the taxpayer to submit a collection information statement before granting Currently Not Collectible (CNC) status. If the IRS grants CNC status, it will periodically review the taxpayer’s ability to pay. The IRS may also file a claim against the taxpayer’s property, known as a lien, to protect its financial interests.
Deciding how to appeal to the IRS when you cannot afford to pay the taxes you owe or you dispute the amount owed requires careful consideration. The experienced tax professionals at Highland Tax Group will review your case and advise you on the best strategy for your situation, and can help you comply with all IRS requirements when submitting your request.