Articles

How IRS Digital Payment Reporting Rules Affect Texans Freelancers, online sellers, and small business owners throughout Texas increasingly rely on Venmo, PayPal, Cash App, and other digital payment platforms to receive business income. Taxpayers who use these payment apps should understand how 1099-K reporting rules may affect taxable income and ta...

Why Worker Classification Matters in Texas Many Texas businesses use independent contractors to reduce labor costs, increase flexibility, or support short-term projects. However, improperly classifying workers can create serious legal and financial consequences under federal and state employment laws. Employee misclassification occurs when a busine...

What Is IRS Audit Reconsideration Receiving an IRS audit assessment does not always mean the matter is permanently resolved. In some cases, taxpayers may still challenge audit findings if the IRS overlooked records, used inaccurate estimates, or failed to review key documentation during the original audit. The IRS audit reconsideration process allo...

Why Trusts Play a Critical Role in Wealth Preservation Families with significant wealth often need more than a basic will to protect what they have built over generations. Without strategic trust planning, estate taxes, creditor claims, and family disputes may place businesses, investments, and inherited assets at risk. Trusts can help Texas famili...

Understanding How Estate Planning Can Reduce Future Tax Exposure A family may spend decades building wealth through successful businesses, real estate investments, and careful financial planning, only to see a significant portion lost to unnecessary taxes without proper estate planning. For estates that exceed the federal estate tax exemption, tax ...

Why Tax Planning Matters in Litigation Cases Litigators often focus heavily on liability, damages, and settlement value while giving limited attention to the tax consequences associated with litigation recoveries and expenses. However, the tax treatment of a judgment or settlement can significantly affect the client’s actual net recovery. In many s...

How Does IRS Currently Not Collectible Status Work? Many Texans struggling with IRS tax debt worry about wage garnishments, bank levies, or aggressive collection actions they cannot afford to pay. In some situations, the IRS may temporarily pause collection efforts when taxpayers prove serious financial hardship through the IRS's Currently Not Collectible status. IRS Currently Not Collectible status allows qualifying taxpayers to temporarily stop certain IRS collection activity when paying tax debt would prevent them from covering necessary living expenses. The Wilson Firm helps taxpayers in Houston, The Woodlands, Spring, Cypress, Conroe, Tomball, Magnolia, Harris County, and Montgomery County evaluate IRS hardship relief options. We’ll explain how Currently Not Collectible status may help eligible taxpayers pause IRS collection actions during periods of financial hardship. Disclaimer: This article is for informational purposes only and does not constitute legal, tax, or financial advice. Consult an experienced attorney regarding your specific legal and tax circumstances. What is the IRS Currently Not Collectible Status? RS Currently Not Collectible (CNC) status (also known as IRS not collectible status or currently not collectible IRS status) is a temporary hardship designation available when the IRS determines that a taxpayer cannot afford to pay their tax debt after covering necessary living expenses. Unlike situations involving tax levies or threatened property seizures, Currently Not Collectible status is often pursued proactively by taxpayers seeking relief from IRS collection efforts before enforcement actions escalate. When taxpayers qualify for IRS Currently Not Collectible status, the IRS may temporarily stop: Wage garnishments Bank levies Certain collection notices Property seizure efforts Other IRS collection activity However, penalties and interest generally continue accruing while the account remains in CNC status. How to Get Currently Not Collectible Status Taxpayers requesting Currently Not Collectible status generally must submit financial information showing that paying the IRS would create substantial financial hardship. Taxpayers typically submit their financial information using IRS Form 433-A for individuals or IRS Form 433-F, which is a shorter collection information statement, along with supporting documentation. Financial Information the IRS May Review The IRS may review: Monthly income Necessary living expenses Housing costs Medical expenses Bank account balances Retirement accounts Asset equity Employment status Supporting Documents for Currently Not Collectible Requests Supporting documents may include: Pay stubs Bank statements Utility bills Mortgage statements Medical records Tax returns The IRS reviews whether taxpayers have sufficient disposable income or available assets to make payments toward the tax debt. Taxpayers who fail to file tax returns or submit incomplete documents may not qualify for IRS Currently Not Collectible status. What Happens After the IRS Approves CNC Status? If the IRS approves the Currently Not Collectible status, active collection efforts may temporarily stop. Possible benefits may include: Suspension of wage garnishments Temporary pause on bank levies Reduced collection pressure Additional time to improve financial circumstances Opportunity to evaluate long-term tax resolution options Although collection activity may pause, the IRS may still file a federal tax lien and continue applying future tax refunds toward unpaid taxes. IRS Currently Not Collectible Status vs. Offer in Compromise Many taxpayers confuse the Currently Not Collectible status with an Offer in Compromise, but they are different IRS debt relief programs. Currently Not Collectible Status CNC status temporarily delays IRS collection activity because the taxpayer cannot currently afford to pay the debt due to financial hardship. Offer in Compromise An Offer in Compromise is a settlement program that may allow taxpayers to settle tax debt for less than the full amount owed if they meet certain qualifications. In some situations, taxpayers may first qualify for IRS Currently Not Collectible status before later pursuing an Offer in Compromise, installment agreement, or another tax resolution strategy. Can the IRS Remove Currently Not Collectible Status? Yes. The IRS Currently Not Collectible status is not permanent. The IRS may periodically review a taxpayer’s financial condition and remove CNC status if: Income increases Financial circumstances improve Assets become available Tax returns remain unfiled The taxpayer no longer qualifies for hardship relief Taxpayers generally must remain compliant with future filing obligations and tax payments while the account remains in currently not collectible status. Common Reasons the IRS Denies CNC Requests The IRS may deny a request for IRS Currently Not Collectible status if financial information is incomplete or if the taxpayer appears able to make payments toward the debt. Common reasons for denial include: Missing financial documentation Unfiled tax returns Inaccurate income reporting Excess discretionary spending Undisclosed assets Failure to respond to IRS notices Proper preparation, complete financial information, and timely responses may improve the likelihood of approval. When to Speak With a Texas Tax Relief Attorney IRS hardship cases often become more complicated when taxpayers face large tax liabilities, business debts, or ongoing levy action. Once you receive an IRS notice or recognize that the situation is escalating, consult an experienced tax attorney as soon as possible to evaluate your options before the situation worsens. For example, a Houston taxpayer with more than $110,000 in IRS tax debt after losing a business and experiencing medical hardship may need legal guidance to request Currently Not Collectible status and stop ongoing wage garnishments. An experienced tax attorney can help taxpayers: Prepare financial hardship documentation Respond to IRS collection notices Request Currently Not Collectible status Negotiate installment agreements Evaluate Offer in Compromise options Protect against aggressive collection action Frequently Asked Questions About IRS Currently Not Collectible Status What is the IRS’s Currently Not Collectible status? IRS Currently Not Collectible status is a temporary hardship classification that may stop certain IRS collection actions when taxpayers cannot afford to pay tax debt after covering necessary living expenses. Although collection activity may pause, penalties and interest may continue to accrue, and the IRS may still file a federal tax lien against the taxpayer’s property. How do I qualify for IRS Currently Not Collectible status? Taxpayers generally must provide detailed financial information showing that paying the IRS would create substantial financial hardship. The IRS reviews income, monthly expenses, assets, employment status, and supporting documents before determining whether the taxpayer qualifies for CNC status. Does the Currently Not Collectible status erase tax debt? No. Currently Not Collectible status does not eliminate tax debt; interest and penalties may continue to accrue while the account remains in CNC status. However, the temporary suspension of collection activity may give taxpayers additional time to improve their financial situation or evaluate long-term tax relief options. Can the IRS still file a federal tax lien during CNC status? Yes. The IRS may still file a federal tax lien even if collection activity is temporarily suspended through Currently Not Collectible status. For Texas taxpayers, a federal tax lien may still attach to property despite Texas homestead protections because federal tax law generally overrides certain state exemption rules. Should I hire a tax attorney to request CNC status? Taxpayers facing large tax debts, levy action, or complicated financial hardship situations often benefit from professional legal guidance. A tax attorney can help prepare financial documents, communicate with local IRS offices, and evaluate additional IRS resolution options that may help protect assets and reduce collection pressure. Talk to a Texas Tax Relief Attorney About IRS Currently Not Collectible Status Today IRS Currently Not Collectible status may provide temporary relief for taxpayers experiencing serious financial hardship. Acting early and providing complete financial documentation may improve the chances of stopping IRS collection activity before enforcement actions escalate. The Wilson Firm helps taxpayers in Houston, The Woodlands, Spring, Cypress, Conroe, Tomball, Magnolia, Harris County, and Montgomery County evaluate IRS hardship relief options and resolve collection matters. Contact The Wilson Firm to schedule a consultation with an experienced tax attorney.

Can the IRS Take Your House for Unpaid Taxes Many taxpayers fear losing their homes after receiving IRS collection notices or federal tax lien filings. While IRS home seizures are relatively rare, the IRS can seize certain property when taxpayers fail to resolve significant unpaid tax debt. For homeowners in Houston and The Woodlands, understanding the IRS collection process early is critical before enforcement action escalates. The Wilson Firm helps taxpayers in Houston, The Woodlands, Spring, Cypress, Conroe, Tomball, Magnolia, Harris County, and Montgomery County protect their property and respond to aggressive IRS collection efforts. We’ll explain when the IRS may seize property and the legal options available to protect your assets. Disclaimer: This article is for informational purposes only and does not constitute legal, tax, or financial advice. Consult an experienced attorney regarding your specific legal and tax circumstances. Can the IRS Seize Your Primary Residence Yes. In certain circumstances, the IRS can seize a taxpayer’s primary residence to satisfy unpaid federal tax debt. Unlike civil asset forfeiture by law enforcement, IRS seizure actions are tied specifically to delinquent tax obligations and must follow a strict legal process before a home or other property can be taken. However, the IRS generally must: Assess the unpaid tax debt Issue multiple notices File a federal tax lien Send a final notice of intent to levy Seek court approval before seizing a principal residence Because home seizure is considered a last resort, the IRS typically pursues other collection options before attempting to seize and sell a taxpayer’s home. IRS Tax Liens vs. IRS Levies Many taxpayers confuse a federal tax lien with a tax levy, but they are different collection actions. Federal Tax Lien A federal tax lien is a legal claim against a taxpayer’s property after unpaid taxes remain unresolved. An IRS lien may attach to: Personal residence Future property Bank accounts Business assets Real estate holdings A tax lien can affect home equity, credit issues, and future property transactions. IRS Levy An IRS levy involves the actual seizure of property or funds to collect unpaid taxes. The IRS may levy: Bank accounts Wage income Investment accounts Personal property Real estate in rare cases Unlike a lien, a levy may result in immediate loss of property or funds. How Texas Homestead Laws Affect IRS Collection Action While Texas law provides strong homestead protections against most creditors, the Texas homestead exemption does not apply to federal tax obligations. Under federal law, a federal tax lien attaches to all property belonging to the taxpayer, including a primary residence, regardless of state homestead protections. Because federal tax law generally overrides state homestead protections in IRS collection matters, homeowners facing substantial unpaid taxes should take IRS notices seriously and evaluate collection resolution options as early as possible. When Does the IRS Seek Court Approval for Home Seizure Before the IRS can seize a taxpayer’s primary residence, federal law generally requires the government to seek court approval. The court considers factors such as: Amount of unpaid tax debt Fair market value of the home Available home equity Other collection alternatives Whether the taxpayer attempted to resolve the debt For example, a Houston homeowner with significant home equity and years of unresolved back taxes who ignored multiple IRS notices may face increased risk of enforced collection action. What Happens After an IRS Home Seizure If the IRS receives court approval and proceeds with a home seizure, the property may be sold to help satisfy the unpaid tax debt. After the sale: Mortgage lenders are generally paid first Certain senior liens may be satisfied IRS tax debt is applied to the remaining proceeds Excess funds may be returned to the taxpayer The IRS may also establish a minimum bid before selling the property. Collection Alternatives That May Stop IRS Seizure In many situations, taxpayers may avoid home seizure by addressing the tax debt before the collection process escalates. Potential collection alternatives include: Installment agreements Payment plans Offer in compromise programs Currently Not Collectible (CNC) status IRS Appeals requests Penalty relief requests Taxpayers who respond early often have more options available to resolve unpaid taxes and protect their property. Can the IRS Take Your House if Only One Spouse Owes Taxes The answer depends on ownership structure, state law, and whether the property is considered community property under Texas law. In some situations, the IRS may still file a tax lien or pursue collection action against jointly owned property even if only one spouse owes taxes. However, the non-liable spouse may have legal rights or defenses depending on the circumstances. These situations often become more complicated when significant home equity, business interests, or jointly owned financial accounts are involved. Common Mistakes That Increase the Risk of IRS Collection Action Many taxpayers unintentionally increase the risk of aggressive IRS enforcement by delaying action after receiving IRS notices. Common mistakes include: Ignoring levy notices Failing to file tax returns Missing payment deadlines Refusing to communicate with the IRS Failing to request payment options Waiting until wage garnishments or bank levies begin Early intervention may help taxpayers avoid more severe collection actions. When to Speak With a Texas Tax Attorney IRS collection matters involving unpaid taxes, tax liens, or threatened property seizures often require immediate attention. By the time the IRS begins escalating enforcement actions, taxpayers may have limited options available, making it important to consult an experienced tax attorney as early as possible to evaluate potential solutions For example, a Woodlands homeowner with $220,000 in unpaid business taxes who has received an IRS Notice of Intent to Levy may need legal guidance to negotiate a payment plan, stop levy action, or resolve the tax debt before the IRS seeks court approval for seizure. An experienced tax attorney can help taxpayers: Respond to IRS notices Negotiate installment agreements Challenge improper collection actions Request collection holds Evaluate the offer in compromise options Protect homes and other assets Frequently Asked Questions About IRS Home Seizure in Texas Can the IRS take your house for unpaid taxes? Yes. In certain situations, the IRS can seek court approval to seize a taxpayer’s primary residence when significant unpaid taxes remain unresolved. Although home seizures are relatively rare, taxpayers who ignore IRS notices or fail to address large tax debts may face increased risk of enforcement action. What is the difference between an IRS tax lien and a tax levy? A federal tax lien is a legal claim against property for unpaid taxes, while a tax levy involves the actual seizure of assets or funds to satisfy the debt. Tax liens may affect property ownership and credit issues, while levies can result in wage garnishments, frozen bank accounts, or property seizure. Does the IRS need court approval to seize a home? Yes. Federal law generally requires the IRS to obtain court approval before seizing a taxpayer’s principal residence after issuing multiple notices and evaluating other collection options. Can the IRS seize jointly owned property if only one spouse owes taxes? Possibly. The IRS may still pursue collection action against jointly owned property, depending on Texas community property laws and ownership structure. How can taxpayers stop IRS collection action? Taxpayers may stop or reduce collection actions through installment agreements, payment plans, offer-in-compromise programs, appeals requests, or other IRS resolution options. In some situations, taxpayers experiencing financial hardship may also qualify for Currently Not Collectible status. Speak With a Texas IRS Tax Attorney Before the IRS Takes Collection Action The IRS generally views home seizure as a last resort, but taxpayers who ignore unpaid taxes or collection notices may face increasingly aggressive enforcement action over time. Acting quickly may help protect your home, reduce financial stress, and preserve additional resolution options. The Wilson Firm helps taxpayers in Houston, The Woodlands, Spring, Cypress, Conroe, Tomball, Magnolia, Harris County, and Montgomery County respond to IRS collection matters, federal tax liens, and levy threats. Contact The Wilson Firm today to schedule a consultation with an experienced tax attorney.

What Happens When Significant Wealth Passes Without a Proper Estate Plan Unexpected death without an estate plan can leave families facing probate proceedings, financial uncertainty, and disputes over asset distribution. For those with significant wealth, business interests, or minor children, the consequences can be even more complex. When no vali...

Understanding the Risks to Generational Wealth in Texas In 2026, the federal estate tax exemption increased to $15 million per individual and $30 million for married couples. However, estates exceeding those limits may still face tax rates of up to 40%. IIn Houston, The Woodlands, and throughout the Greater Houston area, strategic estate planning i...

Why Business Owners Need a Strategic Estate Plan Many business owners spend years building successful companies, investment portfolios, and personal wealth, only to leave their business vulnerable to legal disputes, estate taxes, or operational instability. Without proper planning, unexpected death, incapacity, or ownership disputes can ruin years ...

Why Tax Planning Matters in Litigation Cases Litigators often focus heavily on liability, damages, and settlement value while giving limited attention to the tax consequences associated with litigation recoveries and expenses. However, the tax treatment of a judgment or settlement can significantly affect the client’s actual net recovery. In many s...

IRS Offshore Compliance Options for Foreign Asset Reporting Many tax practitioners and taxpayers have noticed increased enforcement in the international tax space. It’s always better to correct failures in filing foreign information returns or FBARs before receiving a letter from the IRS. In certain situations, taxpayers who are living in the Unite...

Offer in Compromise Used to Resolve Significant IRS Tax Debt Taxpayers facing substantial IRS liabilities may qualify for an Offer in Compromise when paying the full amount would create financial hardship. Our client owed approximately $305,000 in federal tax liabilities and sought a resolution that would avoid prolonged IRS collection activity. Af...

Fraudulent Tax Filing Results in IRS Liability Identity theft and fraudulent tax return filings can create serious IRS issues for taxpayers when returns are filed using stolen Social Security numbers. In this case, a fraudulent tax return was filed using our client’s Social Security number to claim a large refundable credit. As a result, the IRS as...

Why Tax Issues Matter in Divorce Tax issues are frequently overlooked in divorce litigation. Parties often focus on custody disputes and dividing assets, but the tax consequences of those decisions can dramatically alter the true economic outcome of the divorce. This article discusses three very important tax issues that arise in a divorce case and...

Overview of Disclosure Requirements This is the second part of a two-part article. In Part 1, we briefly covered several international disclosure forms that must be submitted by certain U.S. taxpayers (including nonresident aliens that meet the “substantial presence test”) in connection with international accounts or transactions, including: FBAR/F...

Overview of Disclosure Requirements This two-part article summarizes FinCen and IRS reporting requirements of U.S. citizens,resident aliens, certain non-resident aliens (e.g., who meet the “substantial presencetest”), domestic entities, domestic trusts and domestic estates that have an interest inforeign financial accounts, brokerage accounts, reti...

An assessment is the IRS’s formal recording of a tax liability on a taxpayer’s account. Once a liability has been assessed, the IRS is authorized to begin collection efforts, such as sending bills, filing liens, and issuing levies. Tax and penalty assessments can arise in a number of ways. Perhaps a taxpayer never filed a return, so the IRS filed a...

What is the TFRP? The Trust Fund Recovery Penalty (TFRP) allows the IRS to hold certain individuals personally liable for the unpaid employment taxes of a business. Under Section 6672 of the Internal Revenue Code, any person who is required to collect and pay over any tax and fails to do so may be liable for a penalty equal to the amount of tax tha...