Currently Not Collectible

While your account is in CNC status, the IRS generally will not levy your assets or income. However, the IRS may still apply federal tax refunds to your debt, file a Notice of Federal Tax Lien, and charge interest and penalties. 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 so it can review your assets, monthly income and monthly expenses.

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

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.

The IRS won’t suspend interest and penalty charges, even if it stops trying to collect the balance due. You may want to consider other possible payment options within your means before asking the IRS to place your account in CNC status.

• There is no fixed income limit for CNC status; the IRS looks at your current financial situation and whether you can pay after meeting your basic living expenses.
• File tax returns for prior years (if you were required to file a tax return), even if you can’t pay the amount you owe right now.
  • If you meet the requirements, you might be able to have your tax return prepared for free at a Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE).
  • The IRS may place your accounts in CNC hardship status if you have unfiled tax returns and are in a hardship situation.
• Continue to file your tax returns on time even if you can’t pay. This will prevent late-filing penalties.
• Gather your information to verify your income, expenses, and any debts you owe (loans, etc.). You may need to provide the IRS this financial information so it can decide whether to grant your request.
  • The IRS may ask you to complete Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, or Form 433-F, Collection Information Statement, and/or Form 433-B, Collection Information Statement for Businesses, before making any collection decision.
  • The IRS may require documentation to support items listed on your Collection Information Statements.

While applying for CNC status

• The IRS may ask you to file any past due returns.
• The IRS may ask you to complete Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, or Form 433-F, Collection Information Statement, and/or Form 433-B, Collection Information Statement for Businesses, before making any collection decision.
• The IRS may require documentation to support items listed on your Collection Information Statements.
• The IRS will continue to charge monthly late payment penalties and interest on your account.
• The IRS will require you to continue to make your Estimated Tax Payments and Federal Tax Deposits, on time.

If the IRS places your account in CNC status

• The IRS may keep your tax refunds and apply them to your debt.
• You can still make voluntary payments.
• The IRS shouldn’t levy your assets or income, unless later federal tax liabilities arise to remove you from an uncollectible status.
• The IRS may file a Notice of Federal Tax Lien (NFTL) even if your account is placed in CNC status. The filing of an NFTL can affect your ability to get credit, and your ability to sell property or other assets.
• The IRS may contact you to update your financial information to be sure your ability to pay hasn’t changed.
• The IRS is required by law to notify the State Department if you are certified as owing a seriously delinquent debt. However, the IRS will not certify anyone as owing a seriously delinquent tax debt if the account has been determined to be CNC due to hardship.

What if I still can’t pay in the future?

If the IRS sends you a notice about your tax bill, call the number on the notice to discuss your financial situation. The IRS will take your updated information and decide if you still can’t pay your IRS debt and meet your living expenses. Make sure you have all the information about your income and expenses before you call.

You may prevent future tax liabilities by adjusting your withholding, making estimated tax payments or Federal Tax Deposits.

Tax law changes and changes in your personal or financial situation can affect your federal income tax withholding. The IRS encourages taxpayers to check their withholding to make sure they have the right amount withheld.

You may use the IRS withholding calculator to figure your federal income tax and withholding. The withholding calculator is a tool on IRS.gov designed to help you determine how to have the right amount of tax withheld from your paychecks.

When you use the withholding calculator, it will help you determine if you need to adjust your withholding and submit a new Form W-4, Employee’s Withholding Allowance Certificate, to your employer.