How to Apply for Currently Not Collectible (CNC) Status from the IRS?

Currently Not Collectible (CNC)

Every American is required by the IRS to file their taxes each year, with the assumption that they will pay their tax obligation immediately after filing. The majority of taxpayers file and pay their taxes on time, however, some do not. According to records, approximately 5 million people fail to pay their taxes, and approximately 3 million set up payment plans and agreements, but what about the remaining taxpayers? They apply to the IRS for the Currently Not Collectible Status (CNC) in order to avoid the payments.

What is the Currently Not Collectible (CNC) Status?

The IRS determines that a taxpayer does not have the resources or ability to pay their taxes using the Currently Not Collectible (CNC) Status after a thorough inquiry. This status protects taxpayers from IRS penalties and allows them to avoid paying any taxes. This status allows you to talk with the IRS about your situation so that they may check all of your financial information and, if necessary, put you on a payment plan or grant you CNC status.

Before moving on to the next phase, you must have proof that you are unable to pay those taxes. The IRS requires Form 433-F, also known as the Collection Information Statement, to certify your CNC eligibility. This form can be filed to the IRS either by handing it over to an IRS Revenue Officer or by using the IRS Automated Collection System Unit. There’s a better likelihood the IRS will approve the taxpayer’s request for CNC status if they don’t have any assets that the IRS may seize instead of the money. If the IRS approves your inability, you may be eligible for CNC status.

What Happens after I am stated as Currently Not Collectible?

After the IRS has granted you CNC status, the IRS will cease all tax collection activities, including levy and wage garnishment, as well as any other types of activity that involve collecting money from you. You will still receive an annual statement from the IRS detailing the amount of unpaid tax, but it will not be considered a bill, and you will not be required to pay any of it.

If the CNC status is maintained for more than ten years, all taxpayer debts will expire and become non-payable. During those ten years, however, all of the limitations of the 10-year statute remain in effect.

Keep in mind that before approving your request for an IRS payment plan, the IRS will try all possibilities. They look into all of your living expenses and monthly payments to see if there is any way out. They can also set payment limits, for example, if you have a $1,300 monthly auto payment, the IRS can decrease it to $500 so you can pay your taxes.

How to Achieve the IRS Currently Not Collectible (CNC) Status?

Currently Not Collectible

Getting in touch with a Miami Tax Accountant and discussing your concerns with a tax professional is the simplest way to obtain IRS CNC status. Make sure you get an experienced tax professional who has dealt with similar scenarios in the past. You can also submit a direct application using Form 433-F. However, you should first speak with a tax specialist who can help you locate the best scheme for you.

Information Required to Request IRS CNC Status:

To confirm your eligibility for CNC status, the IRS requires a collection of documentation. The following are the documentation you’ll need to show to the IRS:

  • Copies of the most recent pay stubs for each job for the previous month
  • Copies of the most current statements showing all monthly income received
  • Copies of all owned properties’ most recent real estate tax bills
  • All utility bills (copies)
  • Copies of the lease and mortgage bills
  • Copies of all monthly expenses, evidence of assets, and recent credit card payments

Next Steps:

If you’re in a bad financial situation, here are all of your options:

  1. Consider CNC status
  2. If you can resolve the debt in any way, consider an offer in compromise (settlement with the IRS)
  3. If you’re still stumped, seek advice from a tax professional.

It is a tax professional’s job to be extremely aware of all IRS notices and penalties. To learn more about your possibilities, speak with a Tax Preparer in Miami. SDG Accountants are tax specialists with a lot of experience dealing with IRS notices and fines.

Request A Consultation Now

How to Respond to IRS CP2000 Notice?

IRS CP2000 Notice

The IRS can send many notices to your house that were uncalled for, and they could be confusing and stressful to look at. These notices can go over your head because of the tax forms they are referring to and the unending due dates. Here is a complete guide of what one of these notices mean and how to handle IRS CP2000 notice.

What is a CP2000 Notice?

IRS CP2000 Notice

The IRS will send you a CP2000 notice if the income they have on file does not match the income you reported on your tax return. The IRS checks your tax return income against Forms W-2 and 1099 and will give you a notice if your income does not match. CP2000, or underreporting inquiry, is the name of the notice.

This notice primarily concerns taxes and penalties that you may owe as a result of missing or misleading income on your tax return. The IRS can also challenge deductions and credits on your return if they don’t match the income statements you filed under your Social Security number. It’s also possible that the IRS’s information to match your return is incorrect. Because CP2000 notices are computer-generated, there’s a good chance the notice was simply a robot error. There have been numerous instances where the IRS issued a CP2000 notice to a taxpayer and did not receive any funds due to an error.

How to Handle an IRS CP2000 Notice?

Follow the steps below to obtain the correct solution and avoid making any other mistakes:

IRS CP2000 Notice
  1. Assess the situation:
    Before you take any action, you must first assess your situation and begin confirming your unpaid taxes. You must check to see if the income you stated on your tax return is correct. Gather all the documents and statements you have access to under your Social Security Number first. These documents could include your W-2s, 1099s, and any other documentation you have. Compare these documents and forms to your tax return in detail, paying special attention to any lines where you might have made a mistake.
    ~
  2. Contact the Internal Revenue Service (IRS):
    You can then send an IRS response based on the conclusions reached during the analysis process.

    If you agree with the notice and acknowledge that you made a mistake, you can send the CP2000 response form to the IRS along with your tax payment. If you are unable to pay the whole amount owed, you can request IRS Payment Plans and Agreements. If you disagree or just partially agree with the IRS CP2000 notice, you must send all relevant documents and forms to the IRS to prove that the IRS made a mistake and sent the incorrect notice. You can also mail a corrected return, along with all other forms and papers, with the help of a Miami Tax Accountant. Any penalties you may be facing can also be addressed in your response. If the IRS rejects your response, you have the right to appeal.
    ~
  3. Closing the Case:
    Call the IRS to confirm that the case is closed after a few weeks of your response. To be sure, go over all your prior year’s statements and returns to be sure you haven’t made any other mistakes.

How to Get Expert Help?

Find a Miami tax accountant who can assist you in determining the cause of your CP2000 notice and communicating with the IRS on your behalf so that you don’t have to. For any of your IRS issues, seek assistance from a reputable tax accountant in Miami.

SDG Accountant is the best option for all your tax and accounting needs in Miami. We are a cross-border accounting and tax firm that offers a wide range of services. We are the best solution for everything from bookkeeping to expatriate tax!

Request A Consultation Now

What Happens If I Do Not File or Pay my Payroll Taxes?

Payroll Taxes

When it comes to unpaid taxes, the IRS is a little harsher on corporations than on individuals. Businesses owe more taxes and are more involved in tax administration than individuals. People who owe taxes are treated harshly by the IRS, who consider it a significant infraction and a serious felony. They are unconcerned with an individual’s or a business’s financial situation, whether they have declared bankruptcy or are deeply in debt; all they worry about is that you pay the taxes you owe. Payroll taxes are the most strictly enforced by the IRS of any sort of tax. They are highly concerned about unpaid payroll taxes and have hefty penalties for late payment.

A company that receives payroll taxes from its employees is obligated to pay those taxes on their behalf. If a company fails to pay its taxes, it is considered fraudulent and is dealt with accordingly.

What are Payroll Taxes?

Payroll Taxes

All businesses must submit all accurate information to the IRS, make monthly payments to the federal payroll tax department, and file informational returns. The company is obligated to provide a W-2 Form to all workers and a Form 1099 to any individual contractors so that they may identify how much they were paid and what deductions and bonuses they received. All businesses must also use the IRS-created Electronic Funds Transfer (EFT) system to deposit Medicare and Social Security taxes for their employers and employees. This deposit can be made monthly or semi-weekly and is based on forms from past years, such as Form 941. If your employer has more than $50,000 in tax withholding each year, they must deposit semi-weekly, and those with less than $50,000 in tax withholding must deposit monthly. The IRS will determine the frequency of your deposits, and you will be notified.

Businesses must also pay Federal Unemployment Tax Act (FUTA) tax each quarter if their total salaries paid for the quarter exceeded $1,500. In terms of all the forms and their functions, Form 940 is used to report your FUTA tax. Other forms include Form 941 or Form 944.  On a quarterly basis, Form 941 is used to report employee wages, employer withholdings, and Medicare and Social Security taxes. Form 944 is the same as Form 940, however, it is reserved for employers with annual tax withholding of less than $1,000 per year.

What happens when a business fails to pay or file its Payroll Taxes?

When a company fails to pay its taxes, particularly its payroll taxes, it is not a minor issue. Many firms get into financial difficulties and are forced to postpone paying their taxes. This results in a failure to submit a penalty of 5% every month, with a maximum penalty of 25%. Other steps that the IRS could take include levying or enforcing a levy or lien on the bank accounts of businesses or individuals.

How to Solve this Problem?

This is a significant situation that might be difficult to handle. The first step you could take is, of course, to pay your taxes if you can find the money, but if you can’t, here’s what you need to do. If it is completely difficult for you to pay your taxes, you can request extensions. The IRS is often able to be patient and provide you with a time period and a plan for paying these taxes. If you are unable to do so, do not wait for the IRS to come knocking on your door; instead, get assistance. Seek expert assistance from a Miami Tax Accountant who has dealt with similar issues and assisted individuals and organizations in dealing with them efficiently.

Any form of tax problem necessitates the assistance of a professional. Allow the pros to handle the process of owing payroll services, which can be difficult and intimidating. We can assist you in sorting through your options and determining the best solution and payment plan for you. Our team consists of Tax Preparers in Miami who have been dealing with issues like these for years and have solved them effectively. Be a part of our happy clients and let us take care of all your tax concerns.

All you have to do is reach out to us; you can email us at admin@sdgaccountant.com or call us: +1 (786) 706-5905.