What is Currently Not Collectible (CNC) status?
Currently Not Collectible is a status the IRS assigns when the agency believes it can’t “reasonably collect” on an unpaid tax debt. Essentially, if you can show that paying tax debt would cause excessive financial stress then the IRS may assign CNC status.
Once you’re deemed Currently Not Collectible, the IRS stops all collection actions until your financial situation improves. This stops wage garnishment, bank levies and all collection letters.
Who qualifies for Currently Not Collectible?
If you are currently in a financial situation where you can only meet basic living needs, then you may qualify for CNC. You will be required to submit to a full financial review by IRS representatives.
Generally speaking, the IRS will only grant Currently Not Collectible status to taxpayers who are current with filing. If you have unfiled returns, you must file them before you can be considered for CNC.
3 Things to Know about Currently Not Collectible
#1: CNC does not stop penalties and interest
CNC status DOES stop collection actions, so your paychecks don’t get garnished and your bank accounts aren’t drained of funds. However, it does not stop the application of penalties and interest that accrue each month on the debt you owe!
#2: CNC cases are reviewed often
The IRS routinely reviews CNC cases to determine if the potential to collect has changed. If they find your situation has improved, collection actions will resume.
#3: IRS collection actions stop after 10 years
In general, collection actions stop permanently after 10 years, once the statute of limitations on collection expires. The 10 year clock starts from the date the taxes were assessed.