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What if I can’t afford to pay my tax debt to the IRS?

By Attorney Tony Ramos.

Currently Not Collectible status

I’d like to tell you about “Currently Not Collectible” status for taxpayers. With CNC, the IRS puts you on a two-year period without any payments under certain conditions. You must demonstrate to the IRS that your income is not enough to pay more than your living expenses that are reasonable and necessary.

A two year period without payments

Every two years, they look at your tax returns to see if you can afford to start making payments. You need to fill out a form that the IRS uses. It’s a two-page form, which will show all your income, expenses, assets, and liabilities. Now, you do not have to be current on filing your tax returns. But if you have assets that have equity, you can either sell them or borrow against them (the IRS will ask you to do that).

If you have a home with equity…

If you have a home with equity, they will ask you to try to borrow against your home. But in the situation that I’ve just described, if you can’t pay more than your living expenses, you won’t be able to pay a loan so that should not be a problem.

Request a free consultation with Tony Ramos.

If you would like a free consultation with me, call (210) 530-1308 and we’ll be glad to take care of you.

Or if you want to see more options, check out this overview of the 7 main resolution options.

Important Note: If you owe less than 15k to the IRS, it's best to talk to your tax return preparer or the Taxpayer Advocate (find your local advocate at IRS.gov). IRS Taxpayer Advocate Page

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