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If you’re struggling to cover basic living expenses, CNC can help you get ahead of IRS collection actions.
Currently Not Collectible (CNC) is a status that the IRS assigns to tax debt cases that the agency believes it can’t reasonably collect on. If paying anything toward your tax debt would throw you into financial crisis, the IRS is likely to assign you Currently Not Collectible status.
CNC status is also known in the IRS as “Status 53” – named for Form 53 that must be completed to file for CNC.Generally, those whose financial condition only allows them to meet basic living needs are eligible for CNC status. CNC means that the IRS will stop all attempts to collect on the debt until your financial situation improves. No more angry letters, no bank levies, no wage garnishments.
The IRS puts tax debt cases in Currently Not Collectible for a few reasons:
The IRS regularly reviews CNC cases. If they find that your financial situation improves they will resume the collection process. However, legally, the IRS has only 10 years to collect the tax debt.
The IRS charges monthly penalties and interest on all unpaid tax debt. CNC does not stop the IRS from charging penalties and interest. So, keep in mind that although you won’t have to make payments, your tax debt increases monthly. Should your financial situation ever improve, you will be held responsible for a larger amount of tax debt.
To have your tax debt cased assigned CNC status, you will have to submit to a full financial review. The IRS will investigate your financial situation to determine that you really can’t pay anything toward your back taxes.
Generally speaking, the IRS will only assign CNC status if you are current in filing your returns. This means that if you have unfiled returns, you must file them in order to be considered for CNC status.
Professional assistance is helpful when pursuing CNC status. A licensed tax professional will help you understand whether or not you qualify for CNC. They’ll help you file any unfiled tax returns and will make sure your paperwork truly reflects your inability to pay anything toward your tax debt. Remember, CNC is meant to be a temporary status. If you are assigned CNC status, the IRS will regularly review your case to make sure it is still appropriate.
Article last modified on May 30, 2019. Published by Debt.com, LLC . Mobile users may also access the AMP Version: Qualifying for Currently Not Collectible (CNC) - AMP.