How to Declare Financial Hardship with the IRS to Stop Collections

The Economy is Shot We're losing our jobs and ours homes. Many taxpayers don't have money to pay the IRS back. Don’t let the IRS back you into a corner. If there is no feasible way to pay your IRS Tax Debt, you can declare Financial Hardship to (temporarily) halt collections efforts. Although this is a temporary reprieve, it is still a valuable tool for taxpayers in desperate situations.

Currently Not Collectible (CNC)
The IRS cannot force you to pay if doing so would force you to go without necessary living expenses. If you cannot pay the full balance or pay the IRS through an Installment Agreement without sacrificing basic needs, the IRS is required to report the account as “Currently Not Collectible” (CNC). They will review your finances periodically...say every other year or so. You will continue to get a balance notice, generally on a yearly basis. However, unless your finances improve greatly, you will be protected from collections.

Who Qualifies for Currently Not Collectible Status (CNC)?
According to a Report issued by the IRS on January 6, 2009, IRS employees will have greater authority to suspend collection actions in certain hardship cases where taxpayers are unable to pay. This includes:

• Taxpayers that have recently become unemployed
• Taxpayers that rely on Social Security or Welfare Income
• Taxpayers facing devastating illness or significant medical bills

Applying for Currently Not Collectible (CNC) Status
The IRS needs ample proof that you are unable to pay your Tax Debt before they will change your account status to Currently Not Collectible. Here’s what the IRS will request:

• Completion of Form 433F, Collection Information Statement
• Additional documentation, such as receipts, past due bills, and bank statements
• Up-to-date Tax Filings

All contact from the IRS will cease while they determine if you qualify for Currently Not Collectible Status.

Temporary Reprieve Currently Not Collectible status is not a permanent solution for solving your Tax Debt. Your case will be reactivated if there are any indications that your financial situation has improved. For example, the IRS collected over $400 million from cases formerly in Currently Not Collectible Status in 2006 alone.

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