Sometimes, a tax debt may not be collectible due to financial hardship. However, the IRS will not simply take you at your word that you are not able to pay; the agency will undertake a detailed review of your finances to verify this hardship.
The nationwide tax attorneys from The W Tax Group can advise you if you think you will be unable to cover your tax debts. Because our initial consultations are free, you’ll be able to get a good idea about what we offer and how hiring a lawyer can help you demonstrate to the IRS that your hardship is genuine.
Can’t Afford Your Back Tax Bills?
For a taxpayer who successfully demonstrates they have no ability to pay their tax debt, the IRS can apply a status of Currently Not Collectible or CNC. If a taxpayer demonstrates they are in a severe financial hardship and have no ability to make monthly payments or liquidate assets to pay back taxes, the IRS must stop all collection activities, including levies and garnishments.
In addition, 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 running and, if the IRS cannot collect back taxes within this period, the tax debt will expire.
What If It’s Not My Fault?
In some cases, you may not be liable for your spouse’s tax debts. Normally, when a married couple files a return, both taxpayers are responsible for the taxes that are owed, regardless of which spouse was the main income earner. Thus, if back taxes are owed by a married couple, the agency can go after each spouse individually.
Innocent spouse relief removes a spouse or ex-spouse from the responsibility for unpaid taxes, penalties and interest that came about due to the other person’s negligence or other errors. Like many other potential relief options, being represented by experienced tax attorneys from The W Tax Group can often go a long way toward receiving a positive result.