The Offshore Voluntary Disclosure Program (OVDP)
Currently Not Collectible (CNC) means that a taxpayer has no ability to pay his or her tax debt. When the taxpayer demonstrates they are in a severe financial hardship and have no ability to make monthly payments or liquidate assets in order to pay their back taxes, the IRS can declare the account “currently not collectible.” In order for the IRS to consider placing your account in CNC status, the IRS agent will have to review detailed financial forms and substantiating documentation submitted by the taxpayer.
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 CNC 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.
Our tax experts at Direct Tax Relief will evaluate your specific situation to see if CNC status is the best relief option for you. CNC status is considered on an individual basis. In the right circumstances, CNC can indeed provide a good tax solution that permanently solves your tax problem. In other situations it might be a temporary fix to give the taxpayer some breathing room until other tax solutions are available. You need expert tax representation by a qualified professional to get the results that you are looking for.
Does the IRS claim you are a person responsible for unpaid payroll taxes? Is the IRS seeking to secure payment from you personally? We can help!
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To encourage prompt payment of withheld income and employment taxes, including social security taxes, railroad retirement taxes, or collected excise taxes, Congress passed a law that provides for the Trust Fund Recovery Penalty (TFRP). These taxes are called trust fund taxes because you actually hold the employee’s money in trust until you make a federal tax deposit in that amount. The TFRP may apply to you if these unpaid trust fund taxes cannot be immediately collected from the business. The business does not have to have stopped operating in order for the TFRP to be assessed.
Using available funds to pay other creditors when the business is unable to pay the employment taxes is an indication of willfulness.
The IRS will request that any potential responsible parties complete an interview in order to determine the full scope of their duties and responsibilities. A Revenue Officer prepares form 4180, Report of Interview with Individual Relative to Trust Fund Recovery Penalty. Responsibility is based on whether an individual exercised independent judgment with respect to the financial affairs of the business.
Assessing the Trust Fund Recovery Penalty
If the IRS determines that you are a responsible person, they will provide you with a letter stating that they plan to assess the TFRP against you. You have 60 days (75 days if this letter is addressed to you outside the United States) from the date of this letter to appeal their proposal. If protest against the assessment is not made and appealed to the IRS, they will assess the TFRP.
Once the assessment is made, aggressive collection actions will follow. The IRS will take enforced collection action against your personal assets. They will file a federal tax lien or take levy or seizure action. This includes garnishing your wages or levying your bank account.
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