Getting back to the US tax trap families in Israel often fall into when selling an apartment and quickly buying a new one:

Getting back to the US tax trap families in Israel often fall into when selling an apartment and quickly buying a new one:

Out of all the options in my previous post, for most families it's best to apply for CNC status (Currently not Collectable) or PPIA (Partial Payment Installment Agreement).

Many will qualify for this. 

Families often squeeze out their last savings and then some to buy a modest apartment in a preferred location. 

Mortgage payments and other family expenses make each month tough to get through, leaving barely anything left for savings.

The fundamental of this process is to understand is that tax debts with the IRS expire after 10 years (called the CSED date - Collection Statute Expiration Date).

Believe it or not, after this date the IRS can no longer collect the tax, penalties or interest. It starts from when tax was assessed - which is normally from when you reported it on your tax return. 

The reason the IRS does this as a form of statute of limitations, just like criminal cases. 

Congress wanted to give a person opportunity to rebuild, without having to worry about levy of bank accounts decades after a person becomes impoverished. 

They did not want to create never ending uncertainty for individuals and families.

Getting back to CNC or PPIA status: 

If a family can show that their disposable income (extra income not reserved for necessary expenses) is close to $0, the IRS will agree that the debt is currently not collectible (CNC). 

The debt will expire in 10 years if the family's income has not changed substantially. That means that a $100k tax debt can dissolve into $0. 

If the family has some disposable income, but not much, the IRS would agree to a partial payment installment agreement (PPIA). 

Let's say there is a debt of $100k, but only $300 per month of disposable income. $300 per month payments x 120 months = only $36,000, a tax savings of $64,000! The remaining balance of $64,000 is left to expire, never to return!

This is not a loophole or a trick.

It’s how the system works, and families in Israel should know their rights and options.

Don’t wait on this, since once the IRS begins collections, it's much harder to apply for favorable terms.

Reach out now to see if CNC or PPIA is the right fit for you before the IRS acts.