What Is IRS Currently Not Collectible Status?

There are times where you agree you owe the IRS, but you can’t pay the liability in full or make monthly installments due to your current financial situation. If the IRS agrees you can’t both pay your taxes and your basic living expenses, it may place your account in Currently Not Collectible (CNC) status.

While your account is in CNC status, the IRS generally won’t try to collect from you. For example: It won’t levy your assets and income. However, the IRS will still assess interest and penalties to your account and may keep your refunds and apply them to your debt. You’ll also continue to receive an annual bill from the IRS as required under the law.

Before the IRS will place your account in CNC status it may ask you to file any past due tax returns.

If you request CNC status, generally, the IRS may ask you to provide financial information, to review your income and expenses and decide whether you can sell any assets or get a loan.

The IRS may collect the balance you owe if your financial situation has improved when they conduct an annual review of your income.

Does the Tax Liability Go Away in Currently Non Collectible Status?

The IRS can attempt to collect your taxes up to ten years from the date they were assessed. The IRS may suspend the ten-year period in certain circumstances. The time the suspension is in effect will extend the time the IRS has to collect the tax.

Being currently not collectible does not mean the debt goes away, it means the IRS has determined you cannot afford to pay the debt at this time. Moreover, prior to approving your request to delay collection, the IRS will ask you to complete a Collection Information Statement (Form 433-F PDF, Form 433-A PDFor Form 433-B PDF and provide proof of your financial status. Furthermore, the IRS might also request information about your assets and your monthly income and expenses. You should know that if the Service does delay collecting from you, your debt will increase because penalties and interest are charged until you pay the full amount. During a temporary delay, the IRS will again review your ability to pay from year to year. In addition, the IRS may also file a Notice of Federal Tax Lien to protect the government’s interest in your assets.

If you have a tax liability, contact a tax attorney today to discuss your matter.