If you have no financial ability to pay your taxes, the IRS may place your account in currently not collectible status. This way, payments to the Internal Revenue Service would be deferred until your financial situation improves.
Learn more about what having a CNC account means and how to request this status from the IRS.
What is Currently Not Collectible?
Currently not collectible is a status the IRS grants to those taxpayers who can’t afford to make payments towards their tax debt. This status guarantees that the IRS will temporarily stop liens and threatening letters, as well as any attempt to collect the debt until your current financial situation improves.
The IRS will grant you CNC status only if you can demonstrate that collections have put you in economic hardship and that you have no ability to pay your back taxes. If you are unemployed, you may be a good candidate for this IRS tax help.
How does Currently Not Collectible status work?
While your account is placed as currently not collectible, the IRS stops the efforts to collect your tax debt. However, this does not mean that your tax debt goes away. You’ll still owe the past-due tax and penalties and interest will continue to accrue while you remain in this status.
After an annual income review, the IRS may collect the balance you owe if it finds that your financial situation has improved.
As a general rule, the IRS has ten years to collect unpaid taxes from the date of assessment.
How can I request IRS CNC status?
To request currently not collectible status, you will need to contact the IRS directly or hire a tax practitioner to do it on your behalf.
In order to determine whether you qualify for CNC status, the IRS may ask you to complete Form 433-A, Form 433-F and/or Form 433-B. Sometimes you will be able to provide that information to the IRS representative over the phone.
The IRS will also need you to provide information about your income and expenses and possibly some documentation of these as well.
Based on the information you provide, the IRS will complete a financial analysis and will decide whether or not you have the ability to pay the taxes you owe.
If you don’t qualify for CNC status, you may be able to qualify for an installment agreement to make your debt more manageable.
How long does my account remain as Currently Not Collectible?
The IRS will periodically review your financial situation in order to check if it has improved and if you now have the ability to pay your taxes.
If you are still experiencing financial difficulties, your account may remain in CNC status. However, if your financial situation has improved, the IRS will contact you to assign you a payment plan.
Should I hire a tax expert?
Applying for currently not collectible status can be a daunting process so we recommend seeking professional help before making any decisions.
Tax practitioners can help you find out if you qualify for CNC status and can also plead your case before the IRS to increase your chances of achieving currently not collectible status.