Delayed IRS Collection
IRS policy states that whenever the taxpayer raises a question or presents information creating reasonable doubt as to the correctness or validity of an assessment, “reasonable forbearance” will be exercised with respect to collection efforts as long as the interests of the government are not jeopardized.
- This does not mean the taxpayer’s debt will be forgiven, or a tax lien will not be filed, or interest and late payment penalties do not accrue
- It only suspends collection action until the taxpayer has the ability to pay the tax.
Accounts Currently Not Collectible
- Revenue Officers have the authority to determine that a taxpayer’s account is Currently Not Collectible (CNC)
- While declaring an account CNC does not eliminate the assessment, it does stop current efforts to collect the tax
- Collection can resume any time before the expiration of the 10-year Collection Statute Expiration Date (CSED)
- The decision to place an account in CNC status is usually based upon the information in a Collection Information Statement (CIS) that is no more than 12 months old.
- Accounts can be placed in CNC status, even when the taxpayer’s CIS reflects assets or income which can be levied, as long as the collection of the delinquent taxes would prevent the taxpayer from affording necessary living expenses.
- Each taxpayer’s circumstances are unique- factors, such as health and age, are also considered.
- If monthly payments of at least $25 per month can be made, the IRS will require the taxpayer to enter into an installment agreement before placing the account in CNC .
- If the taxpayer’s account is deemed to be CNC, the Revenue Officer will document the decision on Form 53 (Report of Currently Not Collectible Taxes)
- A lien will be filed before an account is declared CNC if the Revenue Officer believes collection efforts will be successful in the future, or if the total tax liability is $5,000 or more.
Collection Due Process Hearing (CDP)
- When a Collection Due Process (Form 12153) request for hearing is filed, all enforced collection action stops.
- The request for a CDP hearing must be sent to the Service Center which sent the Final Notice of Intent to Levy (Letter 1058).
- Once the request is received by the IRS, the practitioner will be contacted in an attempt to resolve the tax issue.
- If the tax issue cannot be resolved, the case will then be sent on to the the IRS operating division known as the Appeals Office.
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