For individuals that lack the financial resources to pay their outstanding tax liabilities, achieving a Non Collectible Status with the Internal Revenue Service (IRS) can be extremely beneficial. In order to be eligible for Non Collectible Status, individuals must provide the IRS with certain financial information. This financial information must prove to the IRS that the individual does not have any surplus income after paying their necessary monthly living expenses and that they have no additional assets. Individuals will need to submit their bank statements along with IRS financial statements and any other relevant financial documentation for review. When dealing with the IRS, it is usually in the best interests of the individual to seek assistance from an experienced tax lawyer. Since most individuals have only a limited understanding of how the IRS works, they often encounter serious complications and difficulties that could be avoided by using a tax attorney. Individuals that believe they may be eligible for Non Collectible Status should seek the guidance of one of our tax professionals.
What Non Collectible Status Means
Before individuals determine that Non Collectible Status is right for them, they need to be knowledgeable of Non Collectible Status limitations. The following information will provide a brief overview of Non Collectible Status limitations, and a tax lawyer can provide individuals with more comprehensive information if needed.
- Non Collectible Status does not eliminate outstanding tax liabilities, this means that the IRS will continue to monitor the individual’s financial records. If a positive change in the individual’s financial circumstances occurs, the IRS may then choose to pursue collection of back taxes.
- Non Collectible Status does not stop the IRS from collecting back taxes. Since the individual’s debt remains, the IRS will continue to monitor the individual’s tax returns. If the IRS determines that it would no longer be fruitless to pursue collection, they may again attempt to collect payment on back taxes through a variety of methods.
- Non Collectible Status does not prevent IRS sanctions or prohibit the IRS from filing a federal tax lien against an individual. The tax debt still exists, and the IRS still has the right to take any actions necessary to collect the tax liability.
Even though Non Collectible Status does not eliminate an individual’s tax debt, it can offer the individual some financial breathing room. There is a statute of limitations on collections, and many individuals remain on Non Collectible Status until the statute of limitations ends at which time the tax debt will be forgiven completely. By consulting with a professional at our law center, individuals can determine if this will be the best course of action for them.
Tax Elimination Through Bankruptcy
According to U.S. Bankruptcy laws, individuals may discharge tax debts that are at least three years old through either Chapter 7 or Chapter 13 bankruptcy. In order to be eligible for this type of tax debt discharge, individuals must meet the following requirements:
- Tax to be discharged must be related to a tax return that was filed two years prior to the date of the bankruptcy petition
- IRS must be made aware of the tax debt at least two years before filing for bankruptcy
- Individual cannot be guilty of the crime of tax evasion
- Tax debt owed cannot be part of a tax return that was filed fraudulently
In addition to meeting the above requirements, individuals must also provide evidence that they filed accurate and truthful tax returns for the four years prior to filing for bankruptcy. If copies of financial documents such as current tax returns are requested, individuals must comply with these requests. This process can be quite complex, and individuals may have trouble navigating this system on their own. Therefore, individuals are encouraged to seek the counsel of a skilled tax attorney for help with tax elimination through bankruptcy.
Getting the Help You Need
Dealing with the IRS can become overwhelming very quickly, and individuals may feel lost and helpless. However, help is available, and the IRS is not an overpowering, unbeatable foe. With the right representation, individuals can settle their tax debts in a way that will be favorable for them. In most cases, individuals will not be able to reach this settlement on their own. Instead of trying to tackle the IRS and their convoluted systems and policies on one’s own, individuals should consult with an attorney at our law center. A tax attorney will have the expertise and know-how that individuals need to successfully negotiate with the IRS. Individuals that need assistance with their outstanding tax liabilities should contact a tax lawyer today.