CTRS Currently Not Collectible Status and Financial Hardship 2

Question 1

What event most commonly triggers the IRS to remove a taxpayer from Currently Not Collectible status and resume active collection?

Accepted Answer

The IRS's systemic income review shows the taxpayer's income has increased significantly

Answer

The taxpayer files a new tax return showing a refund due

Answer

A new Revenue Officer is assigned to the account

Answer

The taxpayer hires a new tax professional

Question 2

Can the IRS file a Notice of Federal Tax Lien (NFTL) against a taxpayer while their account is in Currently Not Collectible status?

Accepted Answer

Yes, the IRS may still file an NFTL to protect the government's interest even while collection is suspended

Answer

No, CNC status legally prohibits filing of any tax liens

Answer

Only if the balance exceeds $100,000

Answer

Only after the taxpayer has been in CNC status for more than two years

Question 3

Which IRS Collection Information Statement is used for businesses requesting Currently Not Collectible status?

Accepted Answer

Form 433-B

Answer

Form 433-A

Answer

Form 433-D

Answer

Form 433-F

Question 4

What is the streamlined CNC threshold that allows the IRS to place accounts in CNC status without a full financial analysis for balances below a certain amount?

Accepted Answer

$10,000

Answer

$5,000

Answer

$25,000

Answer

$50,000

Question 5

What is the IRS's typical review cycle for accounts classified as Currently Not Collectible?

Accepted Answer

Annually when the taxpayer files their tax return, allowing income comparison

Answer

Every 6 months via a mandatory Revenue Officer visit

Answer

Every 3 years through a formal Collection Due Process hearing

Answer

Only when the taxpayer contacts the IRS to request a status update

Question 6

If a taxpayer in Currently Not Collectible status fails to file required future tax returns, what is the most likely consequence?

Accepted Answer

The IRS may remove the account from CNC status and resume enforced collection

Answer

The IRS will automatically extend the CNC period with no penalty

Answer

The IRS will file a substitute for return but maintain the CNC designation

Answer

The taxpayer's CNC status converts to an installment agreement automatically

Question 7

Which of the following situations would most likely disqualify a taxpayer from Currently Not Collectible status?

Accepted Answer

The taxpayer owns a home with significant equity but has no liquid assets

Answer

The taxpayer's monthly expenses equal their monthly income

Answer

The taxpayer has an outstanding balance of $85,000 from multiple tax years

Answer

The taxpayer recently retired and is living solely on Social Security