What CNC Means
Currently Not Collectible means the IRS has determined that collecting the tax would create a financial hardship. Your account is placed in a "hardship" status. The IRS agrees to suspend collection actions such as wage levies and bank levies. Your debt is not forgiven—interest and penalties continue to accrue. The IRS will review your status periodically (typically every 1-2 years) to see if your financial situation has improved.
Eligibility for CNC
To qualify, you must show that your necessary living expenses equal or exceed your income. The IRS uses national and local standards to determine allowable expenses. You complete Form 433-F (Collection Information Statement) or Form 433-A. The IRS compares your income to your expenses; if there is no disposable income, you may qualify. Factors include income, household size, necessary expenses (housing, utilities, food, healthcare, transportation), and asset equity.
The CNC Process
Contact the IRS or have a tax professional contact them on your behalf. Request CNC status and provide financial documentation. The IRS will assign your account to a revenue officer or the Automated Collection System. You may need to provide bank statements, pay stubs, and expense documentation. The IRS will make a determination. If approved, you will receive a notice. If denied, you may need to set up a payment plan or explore other options.
While in CNC Status
Stay current on all new tax obligations. File returns and pay taxes on time. If you fail to do so, the IRS may revoke CNC status. The statute of limitations on collection (generally 10 years) continues to run. If your situation improves, the IRS may contact you to set up a payment plan. You can request CNC again if your situation worsens. CNC provides breathing room but is not a permanent solution.
