Episode 18: In this episode, Timalyn provides information on how to temporarily delay IRS collections. Notice, these delays are temporary, not permanent. The holidays can be difficult for many people. There are people who have felt so overwhelmed that they chose suicide as a way out from the weight of their back taxes. Timalyn hopes this episode will provide some light and hope so that won't be an option for you.
Before Timalyn begins, she reminds listeners of a valuable resource, if you are considering ending your own life: National Suicide Prevention Hotline: 1-800-273-8255 (available 24/7). There is also a Crisis Text Line available. Just text HELLO to 741741.
Currently Not Collectible
This is the formal name for the status you'll request to temporarily delay IRS collections. This doesn't mean the debt will go away. It simply means the IRS agrees that you currently can't afford to pay your tax debt.
Your definition of can't afford to pay and the definition used by the IRS are often different. Timalyn explains you'll have to prove a substantial change in income and provide your expenses. If you've downloaded Timalyn's Back Tax Negotiation Checklist, you know that you should also look at the national standards for living expenses. These standards show what the IRS will allow for certain expenses, based on your family size and where you live.
Proving Your Income
If you're self-employed, you may use a merchant processing system, such as Square or PayPal. This system can make it easier to track your income. Before you contact the IRS, make sure you have your paystubs and the merchant processing report. You'll also need to be able to prove how many people are living in your home. This may be indicated on your previous year's tax return. Remember to be ready to explain a death in the household or birth that has increased the number of people in the household.
IRS Collection Actions
Once your tax account has transitioned to currently not collectible, the IRS will not enforce collection activities. Again, this is temporary. This hold does prevent a tax levy, which Timalyn explained in Episode 5. However, this may not prevent a tax lien. This topic was discussed in Episode 3.
Your Tax Debt Will Grow
Timalyn explains that even though you may temporarily avoid further collection actions, your IRS tax debt will grow. Tax penalties and interest will accrue. Still, the IRS has a limited amount of time to collect a tax debt. It generally has 10 years, unless a tolling event extends that window of time. In Episode 7, Timalyn covered the 10-year limit and discussed tolling events.
Currently not collectible status is not considered a tolling event. It does not extend the time the IRS has to collect the tax debt. The clock is ticking and may work to your advantage.
IRS Forms You May Need
The IRS may require you to submit IRS Form 433-F, the Collection Information Statement. Business owners will also be asked to submit IRS Form 433-B, Collection Information Statement for Businesses. These statements will include your assets, income sources, and expenses. Again, you'll want to compare your expenses to the national standards. For a list of forms and things, you should take into consideration download your free copy of the Back Tax Negotiation Checklist today.
Can I Handle This by Myself?
Timalyn comments that some individuals may be able to complete and submit these forms successfully. Having an experienced tax relief specialist on your side can certainly help you to avoid mistakes like accidentally submitting the wrong information.
You can contact the IRS at 1-800-829-1040. When you eventually get connected with an IRS representative, he/she may be able to help you to determine if you qualify for currently not collectible status. Completing the IRS Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals will help you to determine if you're eligible, without having to wait on hold with the IRS. If you're not eligible, you'll need to set up a payment plan. Timalyn explained setting up an IRS installment agreement in Episode 10.
If your debt is under $25,000 and you think you can afford to pay it off within 36 - 72 months you may qualify for a guaranteed payment plan. If that's the case you can download a copy of Timalyn's E-book, Guaranteed Payment Plan, where Timalyn walks you through how to set up that arrangement online or by phone.
The Taxpayer Advocate is a free resource available through the IRS. They can also help you through this process. They can be reached at 1-877-777-4778.
Hire a Tax Professional
If this is the option you want to choose, the advice and service won't be free, but it will be worth your while. For a detailed explanation of what you should consider when hiring a tax professional, listen to Timalyn in Episode 16.
Whichever route you choose, it's important that you keep the faith and take action to resolve your tax debt. There are numerous resources provided in the show notes for this episode. As Timalyn commented at the beginning of this episode, people can feel overwhelmed. Those feelings can build and result in tragic choices. It doesn't have to be that way. Please consider sharing this episode with your network of contacts and friends. Back taxes shouldn't ruin your life and they definitely shouldn't end your life.
As we conclude Episode 18, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.
Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time. Thanks for listening to today's episode.
For more information about tax relief options, visit https://www.americasfavoriteea.com/ .
If you have any feedback, or suggestions for an upcoming episode topic, please submit them here: https://www.americasfavoriteea.com/contact.
Disclaimer: This podcast is for informational and educational purposes only. It provides a framework and possible solutions for solving your tax problems, but it is not legally binding. Please consult your tax professional regarding your specific tax situation.
