Dec 19, 2007

Your tax debt- Part 15 – Currently Not Collectible- “CNC”- What are some other critical aspects and criteria?

In our continuing series on tax debt resolution options, it is important to note that there are some other criteria that the IRS can consider for any resolution option, including a CNC or an installment agreement. These criteria include, but not limited to, the following question areas:

• Can you use the equity in your current assets to pay off or pay down your liability?
The IRS will always, as they are programmed to do, request that you full pay, full pay in 120 days, borrow from credit lines, friends or family, and borrow against the equity in your assets. It is in their script in the Internal Revenue Manual. However, you need to ask yourself-
– Will the increased debt on asset equity able to be paid in the future or is my situation so
that I cannot afford this additional debt?
– Can I prove this with a loan denial letter from a lender?
• Is the CNC the best option if an OIC cannot work due to:
– Offer amount too large to pay currently
– Cannot get the 20% to pay the OIC down payment
– Dissipated assets that would raise OIC
– Will the IRS consider me just temporarily under-employed? Especially if I am self-
employed.
– Am I self-employed and the IRS will scrutinize my income and deductions to the extent
that the intrusion is not worth the Offer consideration?
• Because the CNC continues the running of the collection statute of limitations (“CSED”), am
I better off letter the toll run?
– This is unlike OIC which suspends the CSED for the Offer consideration period plus 30
days or bankruptcy which most likely does not resolve my tax debt and extends the
CSED for the time in bankruptcy plus 6 months

These are all healthy discussions and evaluations that need to be made in formulating your plan of tax resolution. Unless you have extensive experience in this area, you should not go this alone. It is recommended that you consult a competent tax professional for all of your options and questions.

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