Wednesday, May 7, 2008

What Does CNC Mean to the IRS?

CNC Status mans that the taxpayer has no MDI (monthly disposable income), no liquid assets to pay liability. During CNC Status, the IRS will hold off payment of taxes. They will also put the taxpayer in an uncollectible status with a closing code that determines when you will be sent back into collections. You can request to be put into CNC for a period of 18-24 months, then th IRS will reassess your financial situation (say for example, you come into employment) to see if your AGI is greater than your closing code amount. When you com into money in some form or fashion, the IRS will unwillingly put you back ino he collecion code so that you can resume paying off your liability.
However, say for instance the IRS can't find the taxpayer? Of so, the taxpayer could be put in to default CNC and be put into collecions anytime. The IRS sends a statement of balance due (CP 89) which requt client to contact the IRS. Basically they want to see if anything changes. Finally a tax lien will be filed in this case.
With CNC there are systemic follow ups based on the following three things:

*Unable to locate
*Unable to contact cases

Especially in cases where there are assets able to full pay at a later date (an action must happen to remove a client from CNC). The IRS request mandatory follow-up only when required or when there is a likelihood that revenue will be collected by taking the requested action.

No comments: