Can I Defer Payment on My Taxes?

In some situations, it is possible to delay making payment. Taxpayers with student loans know that they can defer making required payments if they show that they don’t have enough money each month. Something similar can happen with the IRS in a process called being declared “Currently Not Collectible.” This isn’t easy, and you’ll need a lawyer skilled in IRS tax law to help you—but it is possible. Once you are declared non-collectible, the IRS will stop all collection activity, such as wage garnishments and levies.

Review Your Finances

The IRS won’t declare you “Currently Not Collectible” simply because you’re having a hard time paying your bills. Instead, you must show that your monthly income is equal to or less than your allowable monthly expenses. When you meet with your tax attorney, you will review financial documents, such as the following:

  • Bank statements for the past three months
  • Your assets and their current market value
  • Sum of all income
  • List of monthly living expenses, such as food, shelter, clothing, and transportation
  • Any outsized expenses, such as medical expenses

Not all expenses are allowable. For example, you might be renting a $4,000 apartment as a single woman in a small city. According to IRS guidelines, you might only be allowed $1,500 for rent. As an experienced tax lawyer, Jeff Cohen will go through all of your expenses to see how much is allowed and how much income you have left over at the end of the month to contribute to your taxes. If nothing’s left over, you might qualify for “Currently Not Collectible” status.

Complete Your Paperwork

Before requesting not collectible status, you need to file any missing tax returns. In particular, the IRS will be looking to see if you are owed any refunds—which they will keep and apply to the amount that you owe. Sit down with your tax attorney and review your filing history to confirm everything has been submitted.

You’ll also need to submit detailed financial forms—either Form 433A or 433F. You can download these forms online; however, you’ll need to make sure that the information entered is accurate. It’s best to meet with a tax professional to confirm all information has been listed properly.

The Debt Doesn’t Disappear

The good news is that the IRS will stop any collections actions if you are declared “Currently Not Collectible.” This means no levies. No garnishments. No lawsuits. Ideally, you’ll gain enough breathing room to land back on your feet and figure out a way to get your finances in order so that you can eventually pay down your back taxes.

However, your debt is not forgiven. Instead, it continues to accrue penalties and interest, so it only grows larger. And if you eventually begin earning more money, you’ll be taken out of “currently not collectible” status and face potential collections actions.

Nevertheless, there is a ray of hope. The statute of limitations prevents the IRS from collecting unpaid taxes after 10 years have passed. This means that the debt can be effectively wiped out if you qualify as Currently Not Collectible until the statute of limitations period ends. During this time, any future tax returns will be kept by the IRS, but you won’t have to pay back the rest.

Contact a Marietta Tax Attorney Today

Seeking “Currently Not Collectible” status is complicated and requires careful consideration. Jeff Cohen, Attorney at Law, has over 30 years of experience helping taxpayers navigate the IRS. Call him today at 404-937-1414 to set up an phone consultation or fill out an online contact form

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