Mr. Sullivan is a tax resolution expert. He is a Former IRS Agent and a Teaching Instructor with the Internal Revenue Service.
His firm Fresh Start Tax LLC 1-866-700-1040 is comprised of Board Certified Tax Attorneys, CPA’s and other Former IRS Agents, Managers and Instructors.
If you want to make sure you qualify for the Current non Collectable Program ( Economic Hardship, CNC ) if you cannot pay the IRS, it is best to check with a true tax professional. This can completely change your life. It will certainly help you for a season in time.
Economic Hardship- Cannot Pay the IRS Back Taxes
As a Former IRS agent I can tell you there is a program within the IRS-IRM that allows taxpayers who cannot pay there tax bills at the present time, the program is called Economic Hardship. It is obvious why the IRS does not publicize the program, everyone in the world would want there case placed in this file.
To qualify for the Program the taxpayer will have to produce a IRS financial statement. You can find those forms on our home page website under IRS Forms.
Depending where your case is in the IRS computer system you will have to provide a Form 433A ( used by local offices and Revenue Officers ) or the 433F which is used by the ASC Units while the taxpayer is still in letter or notice status.
The Financial Statement must be completely filled in and have all relative documents attached to provide support to the fact you cannot pay the bill on back taxes you owe.
It should be noted that these cases are also call Current Non Collectable or CNC as it is known in the business.
This is not a forever thing. It is also critical to know that these cases go in to this status for a season in time. IRS reviews these cases from time to time.
When the IRS determines to put your case in Hardship Status, few persons know how and why these cases come back out to the field or back into the IRS collection system. Having been a former IRS Agent, I had placed hundreds of cases in the currently non collectible status.
These IRS tax cases Hardship, current not Collectable ) come back out to the ASC Unit or the IRS field office because of only three reasons:
1. The closing Revenue Officer working the case places a mandatory follow-up date on the file. Each Revenue Officer is different. They get a feel for the case based on the financial statement and the asset check that was made during the course of the investigation. Sometimes it is a hunch, other times you get a feel that income may increase at a given time. This mandatory follow-up date is strictly up to the reviewing Revenue Officer.
The manager has the last say on the closing code however most of the time it is left up to the discretion of the RO.
2. A certain closing code is placed on the back taxes case. If the Revenue Officer does not mandate a certain follow-up date, a closing code based on AGI is put on the case. For example, let’s say the closing code is 50.
This means is when the taxpayer reaches $50,000 in a AGI (adjusted gross income), the case will trigger back to the field. Once again, each Revenue Officer makes their own decision.
3. The statute is about to expire. Certain cases will trigger because the ten year statute of limitation on these back taxes is about to expire. These back tax cases usually come out 1 year before the 10 year statute. These are usually large dollar cases.Small cases usually do not get much attention.
The only other way a case may come back to the field is because a Congressional inquiry was made.
The IRS Definition of Economic Hardship
A IRS Economic Hardship ( Cannot Pay the IRS ) occurs when a taxpayer is unable to pay reasonable basic living expenses.
The determination of a reasonable amount for basic living expenses will be made by the IRS Commissioner and will vary according to the unique circumstances of the individual taxpayer. Unique circumstances, however, do not include the maintenance of an affluent or luxurious standard of living.
IRS has a National and Regional Tests
IRS will review your 433A or 433F and compare it to the National or Regional Standards. You must fall within the guideline of the established guideline by your case will be considered for Cannot Pay or an Economic Hardship.
What are the National Standards.
National Standards: Food, Clothing and Other Items
National Standards have been established for five necessary expenses:
1.food,
2. housekeeping supplies,
3.apparel and services,
4. personal care products and services,
5.and miscellaneous.
The National Standard for Food, Clothing and Other Items includes an amount for miscellaneous expenses. This miscellaneous allowance is for expenses taxpayers may incur that are not included in any other allowable living expense items, or for any portion of expenses that exceed the Collection Financial Standards and are not allowed under a deviation.
The standards are derived from the Bureau of Labor Statistics (BLS) Consumer Expenditure Survey (CES).
The survey collects information from the Nation’s households and families on their buying habits (expenditures), income and household characteristics.
IRS also has standards for Housing and Utilities Expenses and also for vehicle and operating costs. See our homepage toolbar, IRS forms.
What the IRS has done to help taxpayers with current Hardships
a. Added Flexibility for Missed Payments.
The IRS is allowing more flexibility for individuals with existing Installment Agreements who have difficulty making payments because of a job loss or other financial hardship. Depending on the situation, the IRS may allow a skipped payment or a reduced monthly payment amount. Taxpayers in this situation should contact the IRS.
b. Additional Review for Offers in Compromise on Home Values.
An Offer in Compromise (OIC), an agreement between a taxpayer and the IRS that settles the taxpayer’s tax debt for less than full amount owed, may be a viable option for taxpayers experiencing economic difficulties.
However, the equity taxpayers have in real property can be a barrier to an OIC being accepted. With the uncertainty in the housing market, the IRS recognizes that the real-estate valuations used to assess ability to pay are not necessarily accurate. So in instances where the accuracy of local real-estate valuations is in question or other unusual hardships exist, the IRS is creating a new, second review of the information to determine if accepting an offer is appropriate.
c. Prevention of Offer in Compromise Defaults.
Taxpayers who are unable to meet the periodic payment terms of an accepted OIC will be able to contact the IRS office handling the offer for available options to help them avoid default.
d. Postponement of Collection Actions.
IRS employees will have greater authority to suspend collection actions in hardship cases where taxpayers are unable to pay. If an individual has recently encountered a job loss or other financial problem, IRS assistors may be able to suspend collection in some situations without documentation to minimize burden on the taxpayer.
e. Expedited Levy Releases.
The IRS will speed the delivery of levy releases by easing requirements on taxpayers who request expedited levy releases for hardship reasons. Taxpayers seeking expedited releases of levies to an employer or bank should contact the IRS number shown on the notice of levy to discuss available options. When calling, taxpayers requesting a levy release due to hardship should be prepared to provide the IRS with the fax number of the bank or employer processing the levy.
Call us today to see if qualify for the Hardship Program, 1-866-700-1040
Cannot Pay the IRS Back Taxes – You can Ask for a Economic Hardship – Former IRS Teaching Instructor
