What happens when you owe the IRS but simply cannot afford to pay?

For some taxpayers, making an immediate payment toward tax debt could prevent them from covering basic living expenses.

In certain circumstances, the IRS may place an eligible taxpayer's account in Currently Not Collectible (CNC) status.

ProTax Advantage helps taxpayers understand whether this type of relief may be appropriate for their circumstances.

Currently Not Collectible status is generally used when the IRS determines that collecting the tax debt would create significant financial hardship.

While the IRS may temporarily suspend certain collection efforts, the tax debt generally does not disappear.

Interest and penalties may continue to accrue, and the IRS may periodically review the taxpayer's financial situation.

Eligibility depends on your financial circumstances.

The IRS may consider factors including:

• Income 
• Necessary living expenses 
• Assets 
• Liabilities 
• Family circumstances 
• Outstanding tax debt 
• Ability to pay 

There is no universal income number that automatically qualifies everyone.

We examine your financial information and IRS records.

We determine whether hardship-based relief may be appropriate and consider alternatives.

When authorized, we communicate with the IRS regarding your case.

We work toward an appropriate resolution while helping you understand what may happen next.

Financial hardship can make tax debt feel impossible to address.

But ignoring the problem may allow collection issues to become more complicated.

The better approach is to understand your situation and determine what options may be available.

Generally, no. CNC status is typically a collection status rather than cancellation of the underlying liability.

Interest and applicable penalties may continue to accrue.

Yes. The IRS may review your financial circumstances to determine whether your ability to pay has changed.

You may have options.

Contact Tammy Graham, MSA, EA to discuss your financial circumstances and learn whether hardship-based relief or another resolution strategy may be appropriate.