Dec 19, 2007

Your tax debt- Part 13 – Currently Not Collectible (“CNC”) - When will the IRS kick you out of a negotiated CNC?

When will your hardship, negotiated CNC be removed by the IRS and when will they start collection on you again?

In the IRS Internal Revenue Manual section - IRM 5.16.1-2 (as of 12-01-2006)-Report of Currently Not Collectible Taxes, the IRS states:

• CNC is Based on AGI and the living expenses needed in the Form 433A, Collection Information Statement, and documentation filed to negotiate CNC status:
• A hardship closing code is input in the IRS computer system based on the Form 433A/Fdata that indicates the amount of income that, if attained, will remove the taxpayer from CNC status:
• Values for the hardship closing codes are as follows: Closing code/AGI Floor
– 24/$20,000
– 25/$28,000
– 26/$36,000
– 27/$44,000
– 28/$52,000
– 29/$60,000
– 30/$68,000
– 31/$76,000
– 32/$84,000

AGI is the “Adjusted Gross Income” from the most recent filed tax year. If the tax return is not filed, the IRS will use the information that they have on filed Forms W-2, 1099 and other statements filed with the IRS from various payors.

Because CNC is temporary, it is recommended that you consult a competent tax professional for all of your options and questions.

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