At first I thought it was old news.
TIGTA came out and exposed a dirty IRS secret: $6.7B in IRS debt was marked “currently not collectible” when it – perhaps – should not have been. Once again, TIGTA is after the IRS for being “inconsistent.” This time, though, it isn’t focusing on enforcement against tax preparers. Instead TIGTA is focusing on taxpayers who go “off the grid.”
Currently Not Collectible, or CNC, is a status the IRS puts a taxpayer in when they decide it is not worth the effort going after them. If the IRS can find the taxpayer, they will generally ask for financials to be sure that the taxpayer cannot pay before closing the file on collection for about two years.
But what if the IRS can’t find a taxpayer? Maybe s/he works under the table, not bank account, pays cash for everything… you get the idea. Well, if the IRS can’t find a taxpayer. They are supposed to follow a strict set of guidelines they had to search certain records:
These research steps include postal tracers, motor vehicle records, courthouse records for real and personal property, and local licensing when the taxpayer owns a business.
As a practical matter, the IRS should be focusing its energy on taxpayers they can find, but with $6.7B dollars at stake, the IRS missed the mark on trying to find these taxpayers. According to TIGTA, 57% of cases it examined missed the mark.
Bottom line is that the IRS Collections unit messed up. (What a Surprise!) And TIGTA wants them to do something about it. TIGTA also recommended that the IRS file more tax liens. (OH GREAT!)
Living off the grid was never the ideal way to avoid the IRS, but if that was your plan – it might get a little bit harder.