Currently not collectible (CNC) is a status that the IRS uses for taxpayers who owe the IRS money but do not have the capability of paying both their reasonable living expenses and their tax balance. While in this status, the IRS will not try to collect or levy the taxpayer(s) assets or income. This is not a true “pause” button though and it’s important to note that the tax debts will continue to accrue interest and typically, all refunds due will be kept and applied to the debt.
In order to qualify for CNC, taxpayers need to be current on all tax filings and estimated tax payments.
Depending on the tax balance and income levels, the IRS may request financial information before determining if the taxpayer(s) qualify for this status. Often, IRS Forms 433-A or 433-F are requested along with documents such as pay stubs (proftc and loss statements for self-employed taxpayers), mortgage statements, car loan statements, ban statements, etc to substantiate the taxpayer’s income, assets, and expenses.
Once CNC has been applied, the taxpayer will receive a letter from the IRS confirming the approval.
The taxpayer’s account may be reassessed annually or when the reported income drastically increases. If income levels change and it is determined that the taxpayer can pay, CNC status is revoked and the taxpayer is expected to pay the remaining tax balance. This is why CNC may be a temporary resolution for those facing a hardship but it is not a long-term solution.
To learn more about other tax resolution opportunities read: