What Is Currently Not Collectible (CNC) Status?
Currently Not Collectible (CNC) status is an IRS designation that may be available to
taxpayers who are unable to pay their outstanding tax debt due to financial hardship. If you cannot afford to make payments under an installment agreement or qualify for an Offer in Compromise, you may be eligible for CNC status.cannot afford to make payments under an installment agreement or qualify for an Offer in Compromise, you may be eligible for CNC status.
When the IRS places an account in Currently Not Collectible status, it temporarily suspends active collection actions. This means the IRS will generally stop enforcement measures such as wage garnishments, bank levies, and aggressive collection efforts while your CNC status remains in effect.active collection actions. This means the IRS will generally stop enforcement measures such as wage garnishments, bank levies, and aggressive collection efforts while your CNC status remains in effect.
It is important to understand that CNC status is not a permanent solution and does not eliminate your tax debt. Instead, it represents a temporary hardship determination by the IRS, acknowledging that you do not currently have the financial ability to make payments. The IRS agrees to pause collection activities until your financial condition improves.
Before granting CNC status, the IRS typically requires a detailed review of your financial situation. This often involves submitting a Collection Information Statement, along with supporting documentation that may include proof of income, monthly expenses, assets, and liabilities. In most cases, the IRS will also require that all past-due tax returns be filed and current compliance be maintained.
While in CNC status, penalties and interest continue to accrue on the outstanding balance. Additionally, the IRS may file a Notice of Federal Tax Lien to protect its interest in the debt, and any future tax refunds may be applied to your unpaid balance. The IRS may periodically review your account to determine whether your financial situation has changed and whether you are able to resume payments.
CNC status can provide temporary financial relief and breathing room, but it should be viewed as part of a broader tax resolution strategy rather than a final outcome.