Owing tax debt can be additionally stressful and frustrating when you are in a difficult financial situation. You may feel like you have no options, so you ignore the debt. This will only worsen the situation, however. Eventually, the Internal Revenue Service (IRS) will take action to collect your debt. You have options to negotiate the debt you owe, including Currently Not Collectible status in Florida, which pauses debt collection for financial hardship. TaxSmith, LLC, can negotiate on your behalf.
Understanding Currently Not Collectible Statutes in Florida
Currently Not Collectible (CNC) status temporarily delays the IRS collection process due to financial hardship. This means the agency won’t send you tax bills or take collection actions to recover your debt. Collection actions include steps like bank levies or wage levies. In Fiscal Year (FY) 2024, the IRS filed 313,792 notices of levies to third parties.
Collection actions also include property liens, but these may still be used under CNC status to protect the agency’s claim to your assets. The IRS will not seize the assets with liens on them during CNC status, but they will make sure the agency has collateral for your debt.
Eventually, the IRS will review your case to determine whether you can pay your taxes or not. If you can, CNC will end. If you can’t, it will likely continue. A Pensacola IRS tax attorney can provide and interpret any Currently Not Collectible status update in your case.
Who Qualifies for Currently Not Collectible Status?
You can qualify for CNC status if the IRS determines that you cannot afford to pay your tax debt at the moment. The IRS must see if one of these two circumstances applies:
- You do not have the financial ability to pay the debt you owe.
- You can’t pay the tax due because doing so would prevent you from meeting your basic living expenses.
Basic living expenses include:
- Shelter
- Clothing
- Food
- Personal care
- Healthcare costs
- At-home cleaning and housekeeping supplies
Local laws in Florida may address other basic necessities. The agency may require you to provide a statement about your financial information when you request CNC status. This statement should show:
- Your assets
- Your monthly income
- Your monthly expenses
This statement proves your financial situation to the IRS to determine if you can get CNC status.
There may be other requirements to request CNC status, including filing your tax returns for previous tax years and continuing to pay your taxes on time.
Under the CNC status, you don’t have to pay your debt. However, when your financial circumstances do change, you will be expected to pay the debt in full, including the penalties and interest that occurred before and during CNC status. Civil penalties in FY 2024 assessed by the IRS totaled $84.1 billion, $20.2 billion of which was on individual, trust, and estate income taxes.
How Do You Get Currently Not Collectible Status?
You can contact the IRS at a phone number for individuals, which operates 7 a.m. to 7 p.m. local time. You can also call the phone number listed on your notice or tax bill. You want crucial financial information on hand when you call, such as your recent bank statements and employment income information. You can explain your situation, prove your financial hardship, and show how a payment plan is not possible for your situation.
Installment agreements are another useful way to address your tax debt, but they are not always the right option. If a monthly payment would cause you financial hardship, then it is not the right option for you. From there, the IRS will review the crucial information and determine whether to grant you CNC status for your tax debt.
FAQs About Currently Not Collectible Status in Florida
How Long Does Currently Not Collectible Status Last?
Currently Not Collectible status lasts for as long as your financial hardship lasts. The IRS may request additional financial information and proof if the hardship lasts longer than expected. Changes in your financial and personal situation are likely to result in an IRS review to determine if the status is still needed. The status ends when you have the financial ability to repay your debt.
What Does Currently Not Collectible Mean With the IRS?
Currently Not Collectible with the IRS means that collection actions are temporarily paused for your tax debt, on the basis of financial hardship, and you cannot pay your debt. This pause is temporary and will end when your financial situation improves. You will be liable for the full debt, its penalties, and interest when the status ends. While the debt is Currently Not Collectible, it still gains penalties and interest.
How Long Is a Tax Debt Collectible in Florida?
The IRS has ten years from the date the tax was assessed to collect it in Florida. Once this deadline passes, the IRS cannot collect the tax, its penalties, or its interest. However, numerous circumstances can extend or suspend the ten-year time limit. These include numerous types of debt relief, such as requesting an offer in compromise or an installment agreement. The time limit is not affected by Currently Not Collectible status.
Why Should You Hire a Currently Not Collectible Status Lawyer in Florida?
It’s helpful to hire a Currently Not Collectible status lawyer to improve your chances of securing the status and preventing collection actions. An attorney can present and prove your financial situation, and they can determine whether this is the right form of debt relief for you. Your attorney can also negotiate with the IRS on your behalf, including at any of the 18 IRS Taxpayer Assistance Center offices in the state.
Your Florida Currently Not Collectible Status Attorney
At TaxSmith, LLC, we have more than a decade of experience in tax code and Currently Not Collectible status laws. Our skilled debt settlement attorney can deal with the IRS and find the right resolution for your tax debt. We believe in effective and transparent legal services because we understand how frustrating tax issues can be.
Our firm can protect your interests through CNC status, negotiating a payment plan, seeking penalty abatement, or even pursuing an offer in compromise. We can review your financial situation to determine which is ideal for you. Reach out to TaxSmith, LLC, today to see how we can provide the support you need.
