How to Be Forgiven of Tax Debt You Cannot Pay
There are a number of life circumstances, such as illness, incarceration, and unemployment, which could put a taxpayer in a position to be unable to pay his or her taxes. For these reasons, the IRS has implemented a system which postpones, and sometimes even forgives, tax debt.
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Instructions
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How to Be Forgiven of Tax Debt You Cannot Pay
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Call the IRS Customer Service line (1-800-829-1040) to request that your account be placed in Currently Not Collectible (CNC) Status. CNC status is a tax status set aside for taxpayers who cannot repay tax due to extenuating circumstances or a financial hardship. Examples of situations which meet the criteria for hardship as outlined by the IRS include illness, incarceration, military service, unemployment, or if the taxpayer's only source of income is welfare or social security. If the amount you owe is less than $1,500, the IRS Customer Service Representative has the discretion to make the decision as to whether you qualify for CNC status over the phone. However, if the amount you owe is over $1,500, you'll need to send in supporting documentation that describes in detail your economic situation.
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Mail the IRS a letter explaining why you cannot afford to pay your tax and attach it to IRS Form 433-F, Collection Information Statement. Form 433-F can be downloaded at www.irs.gov or ordered by calling 1-800-829-3676. Form 433-F requests information regarding your income and expenses and is used by the IRS to determine your ability to repay tax. When you mail Form 433-F back to the IRS, be sure also to include any supporting documentation which could buttress your case, such as doctor's bills, physician statements, or severance letters. If your request involves business tax and not individual tax, send IRS Form 433-B, Collection Information Statement for Businesses, instead of 433-F. If the IRS approves your request to be placed in CNC status, you will remain in CNC status as long as the situation that created the hardship exists.
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Call the Taxpayer Advocate Service (1-877-777-4778) and request that an advocate be assigned to your case if you cannot pay and the IRS has denied your request to be placed in CNC status. Often, taxpayer advocates can help you present and build your case so that, when your request is resubmitted, it is approved by the IRS. Also, the advocate will serve as your representative before the IRS and guide you as to how best to complete your forms and gather IRS documentation.
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