Tax Controversy & Resolution: "Currently-Not-Collectible"

Currently-Not-Collectible ("CNC")

If you cannot pay the amount owe to the IRS, as an alternative you may request your account be placed in Currently-Not-Collectible or Financial Hardship status. However, you will need to provide detailed financial information through Form 433A Collection Information Statement for Wage Earners and Self-Employed Individuals.

“Currently-not-collectible” status may generally apply if the IRS will not be able to collect any owed taxes or penalty charges if:

  • Your wages cover no more than your necessary living expenses so that there is no amount the IRS can garnish

  • You have no assets worth levying

The fact that you do not have valuable assets for the IRS to seize may serve as a temporary solution. If your account is deemed to be non-collectible, the IRS will stop the collection process until your financial situation improves and another form of tax resolution becomes more realistic. Interest and penalties will continue to accumulate against you, and you will have to provide financial statements every year to confirm whether or not you are still “currently” unable to pay the amount owed.

If your financial statements demonstrate that your situation has improved removing eligibility for CNC status, the IRS collection process will resume. However, if the applicable 10-year statute of limitations for back taxes runs while you have “currently-not-collectible” status, the tax debt itself may become permanently non-collectible and no other form of tax resolution will be needed.

See IRS link for additional background: 5.16.1 Currently Not Collectible

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