Tax debt has a way of snowballing, with exorbitant fees causing a true financial headache. Unfortunately, many programs that provide relief in times of difficulty fail to address the very real problem of excessive interest.
Worried about continued increases in IRS fees and interest? Keep reading to learn when the IRS continues to assess interest on tax debt — and how this should play into efforts to have an account declared currently not collectible.
Accruing Interest With a Currently Not Collectible Account
The unfortunate realities of IRS interest quickly become evident to taxpayers approved for currently not collectible status. This opportunity allows taxpayers to temporarily delay collections but does not remove fees or interest from the picture. As such, it’s often prudent for taxpayers to avoid this approach, as it can ultimately lead to unexpected increases in tax debt.
Can Interest Be Suspended or Abated?
In select situations, the IRS may abate penalties such as interest on unpaid taxes. Typically, when CNC is involved, the most reliable route to avoiding penalties means remaining in CNC status for years. Following a decade, the IRS reaches its statute of limitations and can no longer collect on the debt.
To remain in CNC status, all additional taxes must be filed and paid on time — and your financial picture can’t change to the point that the IRS deems you capable of paying your debt.
In most situations, solutions such as offers in compromise or revised installment agreements are preferable to those currently not collectible. Accruing interest is serious business, so it’s important to consult with an expert to determine which options are best for your long-term financial situation.
The Highland Tax Group can help you keep IRS interest and fees to a minimum. Contact us today to learn more about available opportunities for dealing with your tax debt.