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Even with the Fresh Start programs offered by the IRS, there are two important things you should consider if you owe money to the IRS but just cannot pay it.
Low Potential for Realistic Collection
If the IRS believes that a debtor fits into the qualification of “low realistic collection potential” or RCP category, the IRS will not attempt to collect the debt from them. This type of person typically has the following:
- Minimal income
- No assets
- No bank account
- No means of paying their debts.
The IRS will determine if there is a probability of eventually recovering that money. But each situation is distinct. Here, they won’t try to collect your taxes but they also won’t pardon them either.
CNC (Currently Not Collectible) Status
Additionally, there are items that are deemed to be CNCs, or Currently Not Collectible. If your finances are deteriorating, you could apply for CNC status. In other words, they won’t make any attempts to collect your loan for a total time of two years. Although the IRS won’t seize your possessions, you will still face some penalties and interest. It’s understandable though because the IRS is giving you the leeway and in return, you need to do your part.
IRS Debt Forgiveness Program
There isn’t a real IRS debt forgiveness program, but they do have alternative options. These initiatives make an effort to collaborate with the taxpayer in order to come to a mutually satisfactory agreement. You should speak with a tax professional if you find yourself in a scenario where you are concerned about not having the ability to pay your tax obligations on time. If you don’t do your part in settling your tax obligation, the IRS can garnish your wages and take your funds from the bank. This page will give you more information about your tax obligations.
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