I have recently received two questions regarding past due taxes that are due the IRS. It all boils down to one question, “Can I get the IRS off my back?”
IRS negotiation is often more subjective, than objective. The IRS looks at not just your income and expenses, but also the value of your assets and possibility of quick liquidation and what your income should be. It can be strictly a judgment call. That’s what is so frustrating to taxpayers who try to get an easy settlement, just like the guys on TV say they can, and then they find out it’s anything but easy.
A few years ago, I got in a payment plan with the IRS for a small amount each month. They then put a lien on my property! I want to clean up my credit. Short of paying this off, what do I need to do to get the lien off?
Answer: You may qualify to have the lien removed if your outstanding balance is under $25,000, you have an automatic debit on your bank account for payment and the payments are sufficient enough to pay the debt off in 60 months. If you’ve got all that, plus proof that you’ve been making payments in this method, of a sufficient amount to pay it off in 60 months, you can ask the IRS to remove the lien with Form 12277. It’s actually pretty simple to get that done, as long as you qualify.
Question: I previously was approved for a CNC status for past due taxes from an online business. My CNC was changed to collectible because I didn’t include all of my income from ebay. I wasn’t aware that Paypal started reporting to the IRS so my taxes from 2012 and 2013 are not correct.
Answer: CNC means currently not collectible. There are some TV promoters that talk about this status and about how, for a fee, they can get that for pretty much anybody.
It’s not true.
If the IRS does determine there are no assets and your income is too low now, and likely to be in the future, that there is no way for you to repay, they may call it CNC.
It doesn’t mean it goes away forever. Instead, the debt just sits there, lurking, in case you do something wrong. If you don’t file a return or don’t report your income and expenses correctly, all bets are off.
So, in this case, the CNC is gone. You may, or may not, be able to get another brand new one. You will have to qualify again and the fact that you didn’t report all of the income will be a big black mark against you.