Fill Form 843 Hardship 2024-2025

Hi, I'm Lawrence Lawler, national director of the American Society of Tax Problem Solvers. This series is about solving common tax problems. Today, we will discuss the currently non collectible status of a taxpayer. In some instances, the IRS will determine that a taxpayer simply cannot afford to pay what they owe. In these cases, the IRS will put them into currently non collectible status, commonly referred to as CNC. The IRS reviews the taxpayer's financial records and determines that they don't have the means to pay for the necessities of life. As a result, the IRS temporarily suspends any collection action against the taxpayer. The IRS will review the taxpayer's financial position every year to see if there have been any changes. A recommendation for taxpayers who are in currently not collectible status might be to investigate the option of an offer in compromise. Alternatively, if they can afford to make a small payment to start addressing the problem, they could consider an installment arrangement. However, in many cases, an offer in compromise is likely the best solution as it brings finality to the financial problem with the IRS. This option resolves the issue and allows the taxpayer to move forward, unlike the currently non collectible status where penalties and interest continue to accrue. If the taxpayer's financial position doesn't improve, being in this status may not have any impact as they still cannot pay the taxes currently owed, and if the amount owed increases, they will still be unable to pay. However, if their financial position does improve, staying in the currently non collectible status can be costly. Therefore, considering an offer in compromise adds finality to the situation, resolving the problem and allowing the taxpayer to become current with their taxes, getting them out of the currently non collectible...