Currently Not Collectible (CNC) status gives a taxpayer a reprieve from many types of IRS collection activity. Once your CNC status is approved, you won’t have to worry about IRS levies or wage garnishments, at least temporarily.
Benefits of Currently Not Collectible Status
The IRS may agree to place in account in CNC status if the taxpayer can’t afford to make monthly payments or is experiencing a financial hardship. CNC status is an agreement by the IRS to avoid taking certain enforced collection actions for a period of time.
However, CNC status does not eliminate your tax debt. In fact, your tax debt will keep growing as penalties and interest accumulate each month.
CNC status is a good choice if you need temporary relief from IRS collection actions. It is not a permanent solution to your tax problems.
Length of CNC Status
The IRS will generally “check-in” on a taxpayer after they’ve been in CNC status for a while. Basically, the IRS wants to know if your financial situation has improved so you can now start making payments towards your tax debt.
If you file a tax return showing a significant increase in your income, the IRS may come calling. If your situation hasn’t changed, your account may remain in CNC status and be assigned another review at a future date.
Resolving Your Tax Problems
If the Collections Statute Expiration Date (CSED) is close to expiring, CNC status may be used until your debt becomes permanently uncollectible. However, if your CSED isn’t for several more years, you should consider your other tax resolution options.
Taxpayers with financial hardships that are unlikely to change may consider the Offer in Compromise program. It requires more effort to submit an OIC, but you’ll get the benefit for settling your tax debt once-and-for-all if your offer is approved.
If your income increases, you may have no choice but to agree to a payment plan in order to avoid an IRS levy. Don’t be pressured into agreeing to a monthly payment amount you can’t afford. The IRS will negotiate with you, but you need to provide the right supporting documentation to show what you can actually afford.
The Gartzman Law Firm handles IRS tax debt and other tax resolution cases. Use our contact form to request a consultation with an Atlanta tax resolution attorney.