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How to Get Currently Not Collectible Status with the IRS
How to Get Currently Not Collectible Status with the IRS
If you owe taxes to the IRS but can’t afford to pay, getting your account put into “Currently Not Collectible” (CNC) status could give you some relief. CNC status won’t make your tax debt go away, but it will stop IRS collection efforts like levies and wage garnishments as long as you remain unable to pay. This article explains what CNC status is, who qualifies, and how to request it from the IRS.
What is Currently Not Collectible Status?
If the IRS determines you can’t afford to pay your tax debt right now, they may place your account in “Currently Not Collectible” status. This means the IRS won’t try to collect the debt from you (except by taking refunds) as long as your financial hardship continues[1].
CNC status does not make the debt go away – interest and penalties will continue accruing. But it gives you a reprieve from IRS collection action while you get back on your feet financially[2].
How to Request Currently Not Collectible Status
To request CNC status from the IRS[5]:
- Call the IRS at 800-829-1040. If you recently got a notice from them about your tax debt, call the number on the notice instead.
- Explain to the agent that you cannot afford any payments on your tax debt right now without hardship. Be clear that you are requesting “currently not collectible” status.
- The IRS will request financial information from you to verify your situation, including details on income, living expenses, assets, etc. You may need to submit this on Form 433-A.
- Provide any requested documents as quickly as possible. This may include pay stubs, bank statements, bills, etc. to prove your financial situation.
- If approved, the IRS will stop active collection efforts on your account. But they may still take refunds in future years.
Some tips for requesting CNC status:
- Be prepared with financial details in case the agent asks for them right away on the call.
- If the IRS offers you a payment plan instead, only agree if you can truly afford the payments without hardship.
- Consider getting help from a tax professional, as they can help expedite the process and communicate with the IRS on your behalf[2].
What Happens After Getting CNC Status?
Here’s what you can expect once your account is placed into Currently Not Collectible status:
- The IRS will take your tax refunds – Any refunds you’re due in future years will be applied to your tax debt until it’s paid off.
- Interest and penalties keep accruing – Your balance will continue growing due to interest and late payment penalties.
- The IRS may file a tax lien – If you owe over $10,000 the IRS will likely file a public Notice of Federal Tax Lien.
- The IRS will review your account annually – They may request updated financial info each year to verify you remain unable to pay.
- The debt expires after 10 years – IRS generally has a 10-year limit to collect old debts. The clock starts when your debt was first assessed.
Frequently Asked Questions
How long can I stay in CNC status?
You can remain in CNC as long as you continue facing financial hardship and remain unable to pay your tax debt. The IRS will review your situation annually.
I’m in CNC but got a letter from the IRS – why?
The IRS sends annual reminders about your debt even while you’re in CNC status. As long as the letter just reminds you of the balance and doesn’t request payments, you typically don’t need to take action.
Can I stop the IRS from taking my refunds?
Unfortunately the IRS will continue taking refunds while your account is in CNC. However, in cases of extreme hardship you may qualify for help from the Taxpayer Advocate Service to get your refund released.
What if my financial situation improves – do I have to pay?
If your income increases significantly, the IRS may remove your CNC status and pursue active collection again. Be prepared to show your situation hasn’t improved if requested.
Other Options Beyond CNC Status
If you don’t qualify for Currently Not Collectible status, some other options to deal with tax debt may include:
- Payment plan – The IRS may offer monthly installment plans if you can afford some payment.
- Offer in compromise – Settling your tax debt for less than the full amount owed.
- Penalty abatement – Getting late payment penalties reduced due to reasonable cause.
A tax professional can help analyze your situation and guide you to the best resolution based on your specific circumstances.
Get Help with Currently Not Collectible Status
Dealing with IRS debt and collections can be stressful. Here are some resources if you need help getting CNC status or resolving a tax debt:
- Work with a tax pro or enrolled agent – They can deal with the IRS on your behalf and expedite the CNC process.
- Contact the Taxpayer Advocate Service – The TAS assists taxpayers facing economic harm or significant costs. Call them at 877-777-4778.
- Consult a low income taxpayer clinic – Some provide free or low cost help to taxpayers below a certain income level.
Don’t ignore letters from the IRS – calling them to explain your situation is the first step. CNC status could provide temporary relief if you’re facing hardship, giving you time to improve your financial situation.
The Bottom Line
Currently Not Collectible status won’t make your IRS tax debt disappear, but it can stop collections and levies until your financial situation improves. If paying your taxes would cause significant hardship, contact the IRS right away to explain and request CNC status. With some persistence and documentation of your finances, you may qualify for this temporary reprieve.