Hello, THANK YOU for choosing Just Answer. My goal is to help make your life...a little...LESS taxing.
I'm sorry to hear about your situation. I have found that sometimes "LIFE" happens...and when it does, it is seldom at a time of our choosing. You do have a few options. First decide which option works better for your situation (options listed below), secondly, call your local
IRS office and schedule an informal face to face meeting with preferably a supervisor to discuss you situation. You may attend this meeting alone, or you may attend with a qualified tax
professional. Having a tax professional with you might be more advantageous. What you DON'T want to do is to ignore the notices. I suggest that you take action sooner rather than later. It is also best to have all of your tax information handy when attending a meeting with the IRS. You can request Wage and Income Tax
Transcripts and Tax Account Transcripts (Free), by calling 1-800-829-1040, or the Business Hotline at 1-800-829-4933.
CNC (Currently Not Collectible)
OIC (Offer In Compromise)
Listed below are details of each:
Currently Not Collectible means that a taxpayer has no ability to pay his or her tax debts. The IRS can declare a taxpayer "currently not collectible," after the IRS receives evidence that a taxpayer has no ability to pay. Such evidence is usually obtained from the taxpayer on IRS Form 433-F, Collection Information Statement. A taxpayer can request "currently not collectible" status by submitting Form 433-F to an IRS Revenue Officer or the IRS Automated Collection System unit.
Once the IRS declares a taxpayer currently not collectible, the IRS must stop all collection activities, including levies and garnishments. The IRS must send an annual statement to the taxpayer stating the amount of tax still owed. This annual statement is not a bill.
While in not collectible status, the 10-year statute of limitations on tax debt collection is still running. If the IRS cannot collect the tax within the 10-year statutory period, then the tax debts will expire.
An offer in compromise allows you to settle your tax debt for less than the full amount you owe. It may be a legitimate option if you can't pay your full tax liability, or doing so creates a financial hardship. We consider your unique set of facts and circumstances:
Ability to pay;
We generally approve an offer in compromise when the amount offered represents the most we can expect to collect within a reasonable period of time. Explore all other payment options before submitting an offer in compromise. The Offer in Compromise program is not for everyone. If you hire a tax professional to help you file an offer, be sure to check his or her qualifications.
Make sure you are eligible
Before we can consider your offer, you must be current with all filing and payment requirements. You are not eligible if you are in an open bankruptcy proceeding.
Submit your offer
You'll find step-by-step instructions and all the forms for submitting an offer in the Offer in Compromise Booklet, Form 656-B (PDF). You can also view the "Complete Form 656" video. Your completed offer package will include:
Form 433-A (OIC) (individuals) or 433-B (OIC) (businesses) and all required documentation as specified on the forms;
$150 application fee (non-refundable); and
Initial payment (non-refundable).
Select a payment option
Your initial payment will vary based on your offer and the payment option you choose:
Option 1: Submit an initial payment of 20 percent of the total offer amount with your application. Wait for written acceptance, then pay the remaining balance of the offer in five or fewer payments.
Option 2: Submit your initial payment with your application. Continue to pay the remaining balance in monthly installments while the IRS considers your offer. If accepted, continue to pay monthly until it is paid in full.
If you meet the Low Income Certification guidelines, you do not have to send the application fee or the initial payment and you will not need to make monthly installments during the evaluation of your offer.
You can refer to the following IRS webpage for more detailed information regarding OICs.
ou can make monthly payments through an installment agreement if you're not financially able to pay your tax debt immediately. However, you will reduce or eliminate the amount of penalties and interest you pay and avoid the fee associated with setting up an installment agreement if you pay your tax bill in full. Before you apply:
File all required tax returns
Consider other sources (loan or credit card) to pay your tax debt in full to save money;
Determine the largest monthly payment you can make ($25 minimum); and
Know that your future refunds will be applied to your tax debt until it is paid in full.
Avoid the fee for setting up an installment agreement
Pay the full amount you owe within 120 days to avoid the fee. You should apply online to specify this option (or call if you owe more than $50,000). If you cannot pay the full amount within 120 days, the fee for setting up an agreement is:
$52 for a direct debit agreement;
$105 for a standard agreement or payroll deduction
$43 if your income is below a certain level.
Apply for an installment agreement
Apply online if you owe $50,000 or less in combined individual income tax, penalties and interest;
Call the phone number on your bill or notice;
Complete and mail Form 9465-FS, Installment Agreement Request (PDF). If you owe more than $50,000, you will also need to complete Form 433-F, Collection Information Statement (PDF).
For more detailed information on installment agreements, you can refer to the following IRS webpage:
After you have decided on which route you want to take, you should also request a penalty abatement. This is done by submitting the Form 843. See below for links to form and instructions.