Scam Victim Tax Debt

Many romance or other kinds of scam victims will end up with a tax bill.

Maybe you had money flow through an account or cashed in a regulated account that will incur penalties? Either way, you may have bad news from the tax man.

However, in many countries, especially the United States, there are programs that can forgive all or part of the tax liabilities in situations of hardship.

This assumes that you are not going through bankruptcy.

Filing for Hardship with the IRS

Having Your Tax Debt Declared Uncollectible

If you truly cannot afford to pay your IRS tax bill, you may qualify for hardship status.

Hardship status applies to individuals, sole-proprietors, partnerships, and limited liability companies (LLCs).  Moreover, it is also called currently not collectible (CNC) or status 53. Hardship status can stop collection activity for certain tax years where a taxpayer has a liability, but the IRS does not grant this status lightly.

PLEASE NOTE: SCARSSCARS SCARS - Society of Citizens Against Relationship Scams Inc. A government registered crime victims' assistance & crime prevention nonprofit organization based in Miami, Florida, U.S.A. SCARS supports the victims of scams worldwide and through its partners in more than 60 countries around the world. Incorporated in 2015, its team has 30 years of continuous experience educating and supporting scam victims. Visit www.AgainstScams.org to learn more about SCARS. is not a legal or financial professional organization. We are a victims’ assistance organization and present this only to educate about possible options. We strongly suggest that you contact an attorney or licensed financial professional that specializes in tax-related issues before taking any action.

To apply for this hardship status, in most cases, you need to give the IRS detailed financial information. You have to convince the IRS you cannot afford to pay and that forcible collection would cause severe financial hardship. There are other reasons why the IRS grants CNC status (see below).

Remember, with the IRS, penalties also accumulate.

Working With an IRS Representative on Hardship Status

If you have been working with an IRS representative, you can ask the IRS to mark “status 53” on your file or ask for currently not collectible status. Status 53 means the collector or IRS representative has filed Form 53 (Report of Currently Not Collectible Taxes). The IRS files this form internally. Consequently, the IRS may require you to share more information or complete more documents such as a Form 433-A, Form 433-F, or 433-B. However, in some cases, if a collector knows your situation well, they may be willing to do this for you.

Applying for Currently Not Collectible Status

Usually, to get uncollectible status, individuals need to complete Form 433-F (Collection Information Statement for Wage Earners and Self-Employed Individuals), and businesses need to complete Form 433-B (Collection Information Statement for Businesses). In some cases, the IRS may request Form 433-A (Collection Information Statement).  It is a more extended version of Form 433-F. In some instances, if the taxpayer owes less than $10,000, the IRS may not request the taxpayer complete a Collection Information Statement. Generally, the taxpayer in these cases, is disabled, incarcerated, has limited or no sources of income.

These forms request incredibly detailed information about your financial situation. The IRS uses this information to determine your collection potential. In other words, the IRS decides if you can afford to pay them based on the financial information you provide to them using Form(s) 433. The IRS uses Collection Financial Standards to assess how much you can pay them each month. To read more details about Collection Financial Standards.

Information Required to Complete a Collection Information Statement

Here is some information you need to fill out these forms. Note that you may also have to provide copies of these documents to the IRS:

• Personal information (phone number, address, Social Security Numbers, age, details about the health of dependents, living arrangements, etc.).
• Employment information (name of employer, occupation, work phone number, pay stubs, how long employed, etc.).
• Other income (pensions, annuities, social security payments, child support, alimony, investment income, etc.).
• Bank and financial information (checking account statements, list of liquid assets, investment accounts, credit card statements, insurance policies, etc.).
• Information on any legal proceedings (for example, collection activities against you such as liens or garnishments).
• Three months worth of copies of monthly bills and expenses which can include:
  • Food
  • Housing (Rent, Mortgage, Taxes, etc.)
  • Apparel and Services
  • Transportation Costs
  • Utility Costs
  • Personal Care
  • Medical Expenses
• If disabled, you need to show proof such as hospital bills or government records.
• Copies of your most recent tax return(s) (IRS Form 1040, 1040A or 1040EZ). In many cases, if you have unfiled tax returns, the IRS will ask you to file them first.
• When taxpayers owe more than $100,000, the IRS may ask for motor vehicle records, credit reports, and check courthouse records to see if the taxpayer has personal property or real property ownership.

The IRS looks at your assets and if there is no equity in them or if seizing them to pay your tax liabilities creates a financial hardship, obtaining a hardship status is more likely. For example, if the IRS takes your car, then you obviously would not have the ability to get to work.

Confirming CNC Status

Once the IRS confirms CNC status, they will send you a letter, usually, letter 4223, Case Closed – Currently Not Collectible. Furthermore, IRS account transcripts will have similar language.

Proving financial hardship is not easy, but it is possible if you meet the requirements. Check with a professional before trying to file for uncollectible status on your own. A licensed tax professional can help you decide if declaring hardship is the best option for you.

One thing to keep in mind is that being classified as currently not collectible doesn’t solve your tax debt, but it can buy you time to get back your feet. It can also serve as a great option if you do not expect your income to rise in the future (e.g., you are retired).  If your situation does not change by the time the CSED(s) or collection statute expiration date arrives for a given year, the taxpayer will no longer have to money owed for that year.

This Is Just An Introduction

We do not intend this to be a complete course of how this worse nor how to do it yourself – even though you can.

We do advise that you get professional support before talking with or working with the IRS. This is for your safety.

If you were involved as a money muleMoney Mule A money mule sometimes called a "smurfer," is a person who transfers money acquired illegally (e.g., stolen) in person, through a courier service, or electronically, on behalf of others (usually criminals that they are knowingly or unknowingly affiliated). Typically, the mule is paid for services with a small part of the money transferred - but not always. Mules may or may not be aware that they are performing these actions. Money mules are often dupes recruited online for what they think is legitimate employment, not aware that the money they are transferring is the product of crime. The money is transferred from the mule's account to the scam operator, typically in another country. Similar techniques are used to transfer illegal merchandise. Mules can be prosecuted for numerous crimes., keep in mind that even though you may not be facing local prosecution, tax issues may still be a potential and serious.

It is for these reasons we strongly advise speaking to a tax attorney just in case.

For More Information About Scam Victim Financial Recovery:

Select the following SCARS Articles & Guides for more information:

• SUPPORT & INFORMATION FOR NEW SCAM VICTIMS
• Scam Victims Debt Part 1: Recognize It, Confront It, Control It, Survive It!
• Scam Victims Debt Part 2: Debt Collection Scams & Managing Real Collections
• Scam Victims Debt Part 3: Collections & Your Rights
• Scam Victim Debt Part 4: IRS/Tax Debt
• SCARS™ Guide: Reclaiming Financial Control After A Scam
• Online Banking Safety For Scam Victims – An Overview
• Suing Your Money Mule or Scammer
• SCARS Next Steps™ – You Gave The Scammer Your Information?

TAGS: SCARS, Information About Scams, Anti-Scam, Scams, Scammers, Fraudsters, Cybercrime, Crybercriminals, Scam Victims, Online FraudFraud In law, fraud is intentional deception to secure unfair or unlawful gain (money or other assets), or to deprive a victim of a legal right. Fraud can violate civil law (e.g., a fraud victim may sue the fraud perpetrator to avoid the fraud or recover monetary compensation) or criminal law (e.g., a fraud perpetrator may be prosecuted and imprisoned by governmental authorities), or it may cause no loss of money, property, or legal right but still be an element of another civil or criminal wrong. The purpose of fraud may be monetary gain or other benefits, for example by obtaining a passport, travel document, or driver's license, or mortgage fraud, where the perpetrator may attempt to qualify for a mortgage by way of false statements. A fraud can also be a hoax, which is a distinct concept that involves deliberate deception without the intention of gain or of materially damaging or depriving a victim., Online Crime Is Real Crime, Scam Victim Debt, IRS Debt, IRS Penalties, Tax Debt