Currently Not Collectible (CNC) status is a temporary IRS hardship option that pauses collection actions—like wage garnishments and bank levies—when you can’t afford to pay your tax debt. Interest and penalties still accrue, but you gain breathing room until your finances improve.
What Does CNC Status Mean?
- IRS acknowledges you cannot pay your tax debt without sacrificing basic living expenses.
- Collections stop: no garnishments, levies, or property seizures.
- Your debt remains, and interest/penalties continue to grow.
Who Qualifies for CNC Status?
To be approved, you must show:
- Financial hardship → income doesn’t cover both taxes and essentials (rent, food, utilities).
- Documentation → bank statements, pay stubs, expenses, and IRS forms.
- Ongoing review → IRS can reassess annually to confirm hardship.
How Long Does CNC Last?
- IRS generally has 10 years from assessment to collect tax debt.
- CNC may last until finances improve or until the collection window expires.
- Refunds owed during CNC may be taken and applied to your debt.
How Do You Apply for CNC Status?
- Contact the IRS using the number on your notice or 1-800-829-1040.
- Provide financial data: income, household expenses, debts, and assets.
- Cooperate with review: IRS may require yearly updates.
What Should You Consider Before Applying?
- Interest & penalties continue → debt can grow while in CNC.
- Refund offsets → IRS applies any refunds to your debt automatically.
- Not permanent → CNC is temporary and can be lifted if finances improve.
Long-Term Tax Relief Alternatives
- Installment Agreement → pay in affordable monthly amounts.
- Offer in Compromise → settle debt for less if you qualify.
- Penalty Abatement → reduce or remove certain penalties.
- Adjust withholdings → prevent future underpayment issues.
Bottom Line
CNC status doesn’t erase your tax debt—it simply pauses collections while you stabilize financially. It’s a valuable short-term lifeline, but long-term planning is key.
Need guidance? Contact us now, and we can evaluate your finances, apply for CNC on your behalf, and explore other IRS hardship programs to protect you from collections.
Frequently Asked Questions
What is Currently Not Collectible (CNC) status?
Currently Not Collectible (CNC) status is a debt relief option provided by the IRS for taxpayers facing financial difficulty who are unable to meet their tax payment obligations. It grants temporary relief by deferring the need to pay until the taxpayer’s financial situation improves.
How does Currently Not Collectible status work?
When taxpayers are financially unable to fulfill their tax payments, the IRS may grant them Currently Not Collectible (CNC) status. This status stops aggressive collection actions like wage garnishments or property seizures, providing relief until the taxpayer’s financial situation improves.
What are the key characteristics of Currently Not Collectible status?
Key characteristics of Currently Not Collectible (CNC) status include IRS determination based on financial inability to pay both taxes and essential living expenses, financial hardship criteria requiring proof of insufficient funds after covering basic living costs, and account restrictions halting collection activities while interest and penalties on the tax debt continue to accrue.
How can one apply for Currently Not Collectible status?
To apply for Currently Not Collectible (CNC) status, one needs to contact the IRS using the provided contact details, prepare financial information for assessment, and demonstrate financial hardship by showcasing the inability to pay taxes without sacrificing necessities.
What are some important considerations for Currently Not Collectible status applicants?
For taxpayers under Currently Not Collectible (CNC) status, it’s vital to remember that annual financial reviews are required to maintain eligibility, interest and penalties continue accruing despite halted collection activities, and any entitled tax refunds might be applied to the tax debt by the IRS.