When to Request Currently Not Collectible Status and What It Means

Overview

Currently Not Collectible (CNC) status is a temporary IRS designation for taxpayers who cannot pay their tax debt without jeopardizing basic living needs. When granted, CNC generally stops aggressive collection actions—like levies or seizures—while the taxpayer’s financial condition is reviewed. CNC does not forgive the debt: interest and penalties continue to accrue, and the IRS may re-evaluate your status periodically (IRS Publication 594) (https://www.irs.gov/pub/irs-pdf/p594.pdf).

Below I explain when to request CNC, how to request it, what it does and does not stop, and practical tips I use with clients when evaluating whether CNC is the right path.

When to request CNC status

Request CNC when all of the following are true:

• Your available monthly income (after necessary living expenses) is insufficient to make any realistic payment toward the tax debt.
• You have no liquid assets you can reasonably use to pay the IRS without causing hardship (for example, emergency savings that would leave you and your dependents without rent or food).
• You expect your financial hardship to be prolonged or you need time to stabilize your finances (job search, medical recovery, temporary disability).

In practice, I advise a client to consider CNC when a detailed budget—based on a verified financial statement such as Form 433-F (Collection Information Statement)—shows negative net disposable income. If a feasible installment plan or other resolution (like an Offer in Compromise) is realistic, those options often lead to better long-term outcomes. See our guidance on Offer in Compromise and installment alternatives for context: “What Is an Offer in Compromise and How It Works” (https://finhelp.io/glossary/what-is-an-offer-in-compromise-and-how-it-works/) and “When an Installment Agreement Is Better Than an Offer in Compromise” (https://finhelp.io/glossary/when-an-installment-agreement-is-better-than-an-offer-in-a-offer-in-compromise/).

Note: CNC is appropriate when collections would threaten basic living standards. It is not a long-term debt-relief tool when you have disposable income or saleable assets to address the liability.

How to request CNC (step-by-step)

1. Gather documentation

• Recent pay stubs, Social Security or pension statements, unemployment notices
• Monthly bills: rent/mortgage, utilities, auto loan, insurance, medical expenses, child support
• Bank statements and a list of assets (savings, investments, property)
• Use Form 433-F or other IRS collection contact forms when requested by the IRS.

1. Respond promptly to any IRS notice

• If you receive a levy notice or other collection letter, respond immediately. You can often avoid or release levies by demonstrating financial hardship.

1. Contact the IRS collections office handling your case

• If you are working with a revenue officer, provide the financial package directly. If you are responding to an IRS letter, follow the return address or call the phone number shown.

1. Make the request in writing or by phone, and ask for CNC consideration

• Be clear that you cannot pay without jeopardizing necessary expenses and that you are requesting CNC status. The IRS may accept a verbal request but will typically require financial documentation.

1. Follow up and keep records

• Keep copies of everything you send. Note dates and names of IRS representatives you speak with. CNC decisions are sometimes reversed if documentation is incomplete.

My experience: a clear, organized financial package speeds review and reduces back-and-forth with the IRS. Many of my clients obtained CNC more quickly when they used Form 433-F and provided bank statements showing insufficient funds.

What CNC does and does not do

What CNC usually does:

• Suspends most enforced collection activities such as bank levies and wage garnishments while status is in effect.
• Stops phone harassment in many cases because the IRS recognizes the taxpayer’s inability to pay.
• Buys time to stabilize finances without immediate seizure of assets.

What CNC does not do:

• Forgive the tax debt. The underlying liability remains, and interest and penalties continue to accrue.
• Remove tax liens. If the IRS already filed a Notice of Federal Tax Lien, CNC does not automatically remove it. A lien can remain attached to property until paid or otherwise resolved.
• Generally stop the 10-year Collection Statute Expiration Date (CSED). The clock on the IRS’s 10-year collection period typically continues to run while CNC is in effect; CNC does not extend the statute (consult a tax professional for nuances and exceptions).

Practical note: CNC can end when your finances improve, when the IRS re-evaluates your case, or if you fail to provide requested documentation. If your financial picture improves, the IRS can resume collection actions.

Typical timeline and IRS review frequency

• Initial review: After you submit financial information, the IRS may take several weeks to assign CNC status. Response time varies by office workload.
• Periodic review: The IRS may request updated financial information annually or sooner if your situation appears to improve.
• Levies and liens: If you had a levy in place, the IRS will generally release a levy if CNC is granted, but the lien often remains.

In client cases, I’ve seen CNC decisions made within 30–90 days when documentation was complete. Delays commonly occur when financial statements are missing pay stubs or proof of recurring expenses.

Examples (realistic, anonymized)

• Single parent with high medical bills: Monthly income of $2,400; essential expenses total $2,600. After submitting a detailed Form 433-F and bank statements, the IRS placed the account in CNC, which stopped a pending bank levy and allowed the client to focus on medical care and finding steadier work.

• Retiree on fixed income: A couple living on Social Security experienced unexpected home repair costs that depleted savings. Their limited disposable income qualified them for CNC; the IRS suspended wage garnishment of the spouse’s small pension.

These examples reflect common CNC scenarios: negative or negligible disposable income and no realistic means to pay the debt without hardship.

Alternatives to CNC and when to choose them

• Installment agreement: If you can make modest monthly payments without sacrificing necessities, an installment agreement is often preferable because it stops aggressive collection and puts you on a predictable payoff path. See: “When an Installment Agreement Is Better Than an Offer in Compromise” (https://finhelp.io/glossary/when-an-installment-agreement-is-better-than-an-offer-in-a-offer-in-compromise/).

• Offer in Compromise (OIC): When your reasonable collection potential is lower than the IRS’s full claim and you can make a lump-sum settlement or structured payment under OIC rules, an OIC may permanently reduce the debt. Consider OIC only after careful preparation; review these pages: “What Is an Offer in Compromise and How It Works” (https://finhelp.io/glossary/what-is-an-offer-in-compromise-and-how-it-works/).

• Bankruptcy or other relief: In some situations, bankruptcy can affect tax obligations—but tax discharge rules are complex. Consult a bankruptcy attorney and tax advisor.

Common mistakes and how to avoid them

• Sending incomplete documentation: The IRS will often deny CNC or delay the decision if the financial package lacks proof. Provide pay stubs, bank statements, and a clear monthly budget.
• Assuming CNC is permanent: CNC is temporary and subject to review. Use the pause to stabilize finances or pursue a longer-term solution.
• Ignoring notices: Even in CNC, keep filing returns and answering IRS notices. Failure to file returns or respond can lead to enforced collections or disqualification from CNC.

Practical tips I use with clients

• Keep a current, conservative monthly budget showing necessary expenses first.
• Maintain a single folder (digital and paper) of all collection-related documents and IRS communications.
• If you have a revenue officer assigned, be proactive and courteous—many cases are resolved faster with cooperative communication.
• Consider professional representation for complex cases. A tax professional or enrolled agent can package financials and negotiate with the IRS on your behalf.

Authority and further reading

• IRS Publication 594, The IRS Collection Process (https://www.irs.gov/pub/irs-pdf/p594.pdf).
• General IRS collections information (irs.gov).
• Investopedia: definition and overview of CNC (https://www.investopedia.com/terms/c/currently-not-collectible.asp).

Disclaimer

This article is educational and reflects general best practices as of 2025. It does not replace personalized tax advice. Tax situations vary; consult a qualified tax professional or attorney for advice specific to your circumstances.