Dec 19, 2007

Your tax debt- Part 9 – More Currently Not Collectible (“CNC”) Hidden Details- your CNC status with the IRS

In previous blog entries, I stated that there are many reasons that the IRS will put you in CNC status. These reasons are defined in “closing codes” by the IRS in the Internal Revenue Manual section – IRM 5.16.1.1:

Accounts may be reported currently not collectible (CNC) for a variety of reasons.
The appropriate closing codes (cc) are in parentheses. The most commonly used
closing codes are as follows:
· inability to locate the taxpayer or assets (03)
· partial expiration of the assessment prior to issuance (04)
· complete expiration of the statutory period for collection or suit initiated to reduce tax claim to judgment (05)
· For International casework, inability to collect a liability from a taxpayer living in a foreign country (06)
· a corporation or LLC classified as a partnership or association taxable as a corporation liquidated in bankruptcy (07)
· death of an individual with no collection potential from the decedent estate or no collection potential for estate taxes (08)
· accounts below tolerance (09)
· a corporation, certain limited liability partnerships, or an LLC classified as a partnership or association taxable as a corporation which is inactive and defunct with no assets (10)
· inability to contact a taxpayer although the address is known and there is no means to enforce collection (12)
· a corporation or LLC classified as a partnership or association taxable as a corporation remains in business and is current but is unable to pay back taxes (13)
· when suspending collection of BMF balance due accounts when the key individual is deployed to a combat zone; see IRM 5.1.7.9.3.1 for additional information (14)
· corporate income tax liabilities owed by a financial institution certified as insolvent by the Office of the Controller of the Currency or the Office of Thrift Supervision (15)
· collection of the liability would create an undue hardship for taxpayers by leaving them unable to meet necessary living expenses (24-32) – this is the NEGOTIATED CNC

It is recommended that you consult a competent tax professional for all of your options and questions.

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