Overview
Currently Not Collectible (CNC) is a relief option the IRS uses when it determines a taxpayer lacks the ability to pay federal tax debt. CNC can stop aggressive collection steps such as levies and wage garnishments for a period of time, giving people breathing room to stabilize their finances. However, CNC is not forgiveness. The underlying tax liability remains, interest and penalties generally continue to accrue, and the IRS may periodically review your financial situation and resume collections if you regain ability to pay (IRS Publication 594, The IRS Collection Process: https://www.irs.gov/pub/irs-pdf/p594.pdf).
This article explains how CNC works, who typically qualifies, what protections and limits it provides, practical steps to request CNC, and safer alternatives to consider.
How CNC Works in Practice
- Collection pause: When the IRS accepts CNC for your account, it generally suspends active collection activity — most field and Automated Collection System (ACS) levies are paused and telephone calls from revenue officers related to collection should stop for the period the IRS records you as CNC.
- Debt remains: The unpaid tax balance continues to exist; interest and penalties normally continue to accrue until the debt is paid or otherwise resolved.
- Periodic reviews: The IRS can and will periodically review CNC cases. If your financial situation improves, they may remove the CNC designation and resume collection.
- Collection Statute: CNC does not stop the 10-year Collection Statute Expiration Date (CSED) — the clock on the IRS’s legal ability to collect generally continues to run while you are CNC.
Sources: IRS Publication 594; IRS collection guidance (see IRS collections pages: https://www.irs.gov/collections).
Who Qualifies and What the IRS Looks For
The IRS evaluates CNC on a case-by-case basis. Key factors include:
- Monthly income after necessary living expenses
- Liquid assets that could be used to pay taxes (savings, investments)
- Nonexempt equity in property
- Household size and unavoidable expenses (medical costs, childcare)
To request CNC, taxpayers commonly submit an updated Collection Information Statement. For individuals this is often Form 433-A (Collection Information Statement for Wage Earners and Self-Employed Individuals) or the shorter Form 433-F. Self-employed businesses use Form 433-B or business financial statements when applicable. The IRS may also accept detailed financial documentation by mail or through the IRS Online Payment Agreement portal when directed by a revenue officer.
What CNC Stops — and What It Doesn’t
What CNC usually stops:
- New levies on wages and bank accounts in most cases while CNC is in effect
- Most new field collection activity and some Automated Collection System levies
What CNC does not stop:
- Interest and penalties, which generally continue to run (so your balance can grow)
- The tax debt itself — CNC is not forgiveness
- The Collection Statute Expiration Date (the 10-year collection period)
- Liens: existing federal tax liens generally remain on the public record unless the IRS takes specific action to withdraw them
Note: There are exceptions where the IRS will still use limited enforcement to protect public revenue (for example, when there is suspected fraud, or criminal tax matters). Always verify specific actions with the IRS representative handling your case.
How to Request CNC — Step-by-Step
- Gather documentation: pay stubs, bank statements, proof of recurring expenses (rent/mortgage, utilities, insurance, medical bills), and a recent budget showing income and reasonable living expenses.
- Complete the correct Collection Information Statement: usually Form 433-F or Form 433-A for individuals. If the IRS requests more detail, be ready to supply supporting bank and billing statements.
- Contact the IRS collection specialist handling your account or call the number on the notice. If you haven’t been contacted yet, call the IRS Collections at the number for your notice or the general collections help line (check current IRS contact information at https://www.irs.gov).
- Submit the form and documentation as instructed. If you work with a tax professional, the IRS will often accept signed authorization (Form 2848) to discuss the case with them.
- Keep copies and follow up: write down representative names, dates, and any case ID numbers. The IRS will review and notify you of the determination.
Typical timeline: review times vary — expect weeks to a few months depending on caseload, whether your case is with ACS or a field office, and completeness of documentation.
Alternatives and When to Use Them
CNC is one tool, but it’s not always the best fit. Consider these alternatives:
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Installment Agreement: A monthly payment plan can be a better option when you can make some payment each month. For a comparison of installment agreements versus offers in compromise, see Choosing Between an Installment Agreement and an Offer in Compromise (FinHelp) (https://finhelp.io/glossary/when-an-installment-agreement-is-better-than-an-offer-in-compromise/).
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Offer in Compromise (OIC): If you can’t pay the full tax owed and there is little realistic potential to pay in the future, an OIC might settle your debt for less than the full amount. See When an Offer in Compromise Could Be the Right Move (FinHelp) for a full breakdown (https://finhelp.io/glossary/when-an-offer-in-compromise-could-be-the-right-move/) and Preparing an Offer in Compromise: Documentation Checklist (https://finhelp.io/glossary/preparing-an-offer-in-compromise-documentation-checklist/).
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Bankruptcy: In limited situations, some tax debts may be dischargeable in bankruptcy; consult a bankruptcy attorney and tax specialist because the rules are complex.
Choosing between CNC, an installment agreement, or an Offer in Compromise depends on your current cash flow, assets, and prospects for future income.
Real-World Examples (Illustrative)
Example 1 — Short-term hardship: A taxpayer loses a job and has no savings. After submitting Form 433-F and proof of expenses, the IRS places them in CNC for 12–18 months while they seek new employment. When they find work, the IRS reviews the case and may request repayment or offer an installment agreement.
Example 2 — Long-term low income: A retiree on fixed, very low income with no equity in assets qualifies for CNC. The IRS leaves their account CNC for an extended period, though interest continues to accumulate and the lien remains.
Example 3 — Business downturn: A small business owner shows negative cash flow and no liquid assets. The IRS agrees CNC while the owner restructures the business; later, the owner enters an installment agreement once revenue stabilizes.
These examples reflect typical outcomes but each case depends on the facts and documentation presented.
Common Mistakes and Pitfalls
- Thinking CNC erases the debt. It does not.
- Failing to file future tax returns. If you do not file your required tax returns, the IRS can issue substitute returns and assess additional tax, which won’t be protected by CNC.
- Ignoring notices. CNC doesn’t mean you can stop reading or responding to IRS letters; they may ask for updated financial information.
- Forgetting the CSED. The 10-year collection period keeps running, so understand how long the IRS can legally collect.
Practical Tips from a Tax Resolution Professional
- Keep a simple, accurate budget to show the IRS — clear numbers help more than vague claims of hardship.
- If possible, get a signed Form 2848 to allow a trusted tax professional to speak for you — that often speeds communications and reduces errors.
- Ask the IRS for a written determination of CNC; don’t rely only on verbal assurances.
- Consider the Taxpayer Advocate Service if you’ve exhausted normal channels and need help — TAS can assist taxpayers experiencing significant hardship or system delays (https://taxpayeradvocate.irs.gov/).
Frequently Asked Questions
Q: Will the IRS still send notices if I’m CNC?
A: Yes. The IRS may still send notices asking for updated financial information or notifying you of actions. Continue to open and respond to all mail.
Q: Can CNC be appealed or reviewed?
A: If the IRS denies CNC, you can discuss options with the revenue officer, request appeals through the Collection Appeals Program (CAP), or contact the Taxpayer Advocate Service.
Q: Does CNC stop penalties and interest?
A: Generally, no. Penalties and interest usually continue to accrue unless a specific abatement is granted.
Sources and Further Reading
- IRS Publication 594, The IRS Collection Process: https://www.irs.gov/pub/irs-pdf/p594.pdf
- IRS Offer in Compromise: https://www.irs.gov/individuals/offer-in-compromise
- Taxpayer Advocate Service: https://taxpayeradvocate.irs.gov/
Professional Disclaimer
This article provides general information about the IRS “Currently Not Collectible” status and is not a substitute for personalized tax advice. For help with your specific situation, consult a qualified tax professional, enrolled agent, CPA, or attorney.
