Currently Not Collectible (CNC): Pause IRS Collections

If paying the IRS would keep you from meeting basic living expenses, you may qualify for CNC status.
The IRS will suspend levies and garnishments while you remain in hardship.
Learn how to:

Complete Form 433-A/B/F.
Document essential living expenses.
Maintain compliance once approved.

What is Currently Not Collectible Status?

Currently Not Collectible (CNC) status is a temporary suspension of IRS collection activities when the agency determines that collecting the tax debt would create economic hardship for the taxpayer. While your tax debt remains, the IRS agrees to stop active collection efforts, including wage garnishments, bank levies, and asset seizures.

Key Features of CNC Status:

Temporary Relief: Collection activities are suspended
Debt Remains: You still owe the tax debt
Interest Continues: Interest and penalties continue to accrue
Periodic Review: IRS reviews your financial situation regularly
Statute of Limitations: Collection statute continues to run

Professional tax relief assistance can help determine if CNC status is the right option for your situation and guide you through the application process.

Who Qualifies for CNC Status?

Financial Hardship Requirements

The IRS grants CNC status when collecting the tax debt would prevent you from meeting basic living expenses. Qualifying situations include:

Individual Taxpayers:

Income Below Allowable Standards: Monthly income is less than or equal to allowable living expenses
Temporary Financial Crisis: Job loss, medical emergency, or other temporary hardship
Fixed Income Situations: Social Security, disability, or pension income insufficient for both living expenses and tax payments
Elderly or Disabled: Age or health conditions prevent earning additional income

Business Taxpayers:

Business Operating at Loss: Company cannot meet operating expenses
Seasonal Business Issues: Temporary cash flow problems due to business cycle
Economic Conditions: Industry downturn affecting business viability
Key Personnel Issues: Loss of key employees affecting operations

Documentation Requirements

To qualify for CNC status, you must provide comprehensive financial documentation:

Required Forms:

Form 433-F: Collection Information Statement (individuals)
Form 433-B: Collection Information Statement (businesses)
Form 433-A: Collection Information Statement (wage earners/self-employed)

Supporting Documentation:

Bank statements (3-6 months)
Pay stubs or income verification
Proof of monthly expenses
Asset valuations
Medical bills (if applicable)
Unemployment documentation
Social Security award letters

IRS Allowable Living Expenses

The IRS uses national and local standards to determine allowable living expenses:

National Standards (2024):

Food, Clothing, Personal Care: $779/month (1 person) to $1,863/month (4+ people)
Housekeeping Supplies: $40/month (1 person) to $85/month (4+ people)
Miscellaneous: $170/month (1 person) to $400/month (4+ people)

Local Standards:

Housing and Utilities: Varies by county and family size
Transportation: Vehicle ownership and operating costs by region

Additional Allowable Expenses:

Health insurance premiums
Medical expenses exceeding 2.5% of income
Court-ordered payments (child support, alimony)
Tax professional fees
Minimum payments on secured debt

Conditional Expenses:

The IRS may allow additional expenses in certain circumstances:

Private school tuition (special needs)
Charitable contributions
Life insurance premiums
Retirement contributions

Application Process for CNC Status

Step 1: Gather Financial Information

Collect all required documentation:

Complete financial statements
Proof of income and expenses
Asset valuations and debt information
Supporting documentation for hardship

Step 2: Complete IRS Forms

Form 433-F: Most common for individual taxpayers
Form 433-A: For wage earners and self-employed individuals
Form 433-B: For business taxpayers

Step 3: Submit Your Request

Contact Methods:

Phone: Call the number on your IRS notice
Mail: Send completed forms to address on notice
In Person: Visit local IRS office
Through Representative: Have tax professional submit on your behalf

Step 4: IRS Review Process

The IRS will:

Review your financial information
Verify income and expense claims
Determine if you qualify for CNC status
Issue determination letter

Step 5: Maintain Compliance

If approved for CNC status:

File all future tax returns on time
Pay current year taxes in full
Report significant changes in financial situation
Respond to periodic IRS reviews

Types of CNC Status

Hardship (Code 53)

For: Individuals experiencing economic hardship
Duration: Until financial situation improves
Review: Annually or when income increases significantly

Currently Not Collectible - No Assets (Code 54)

For: Taxpayers with no assets and minimal income
Duration: Extended periods with less frequent review
Review: Every 2-3 years or when circumstances change

Temporarily Uncollectible (Code 55)

For: Temporary financial difficulties
Duration: Short-term (6 months to 2 years)
Review: More frequent monitoring of financial recovery

Advantages and Disadvantages of CNC Status

Advantages:

Immediate Relief: Stops wage garnishments, levies, and seizures
Breathing Room: Time to recover financially without IRS pressure
Maintains Assets: Protects property from IRS seizure
Flexible Duration: Can last until financial situation improves
Professional Assistance: Can be combined with other relief options

Disadvantages:

Debt Remains: Tax liability is not reduced or eliminated
Interest Accrues: Interest and penalties continue to accumulate
Periodic Reviews: Must provide updated financial information
Temporary Solution: Not a permanent resolution
Future Collection: IRS can resume collection when situation improves

Maintaining CNC Status

Compliance Requirements:

File Returns: All future tax returns must be filed timely
Pay Current Taxes: Stay current with ongoing tax obligations
Report Changes: Notify IRS of significant financial improvements
Respond to Reviews: Provide updated financial information when requested

Common Reasons for CNC Termination:

Significant increase in income
Acquisition of valuable assets
Failure to file current returns
Non-payment of current year taxes
Failure to respond to IRS review requests

Strategies to Maintain Status:

Keep detailed records of financial hardship
Report only required changes to IRS
Maintain minimal lifestyle during CNC period
Plan for eventual resolution of tax debt

CNC Status vs. Other Relief Options

When CNC is Best:

Temporary financial crisis expected to improve
Cannot afford any payment toward tax debt
Need immediate relief from collection actions
Exploring other long-term solutions

Alternative Options:

Installment Agreement

Better if: You can afford monthly payments
Advantage: Stops penalties from accruing at full rate
Disadvantage: Requires monthly payments

Offer in Compromise

Better if: You qualify for debt settlement
Advantage: Permanently resolves tax debt
Disadvantage: Strict qualification requirements

Penalty Abatement

Better if: Penalties represent significant portion of debt
Advantage: Reduces total amount owed
Disadvantage: Doesn't address underlying tax debt

Professional tax help can evaluate all options and recommend the best strategy for your specific situation.

Special Situations

Social Security and Disability Income

Protection: IRS generally cannot levy Social Security benefits
CNC Qualification: Fixed income often qualifies for CNC status
Documentation: Provide award letters and benefit statements

Elderly Taxpayers

Special Consideration: Age and health factors considered
Income Limitations: Fixed retirement income often qualifies
Asset Protection: Primary residence and necessary assets protected

Self-Employed Taxpayers

Business Expenses: Necessary business expenses allowed
Income Verification: Profit/loss statements required
Seasonal Variations: Irregular income patterns considered

Multiple Tax Years

Combined Debt: All tax years considered together
Prioritization: IRS may prioritize certain tax years
Comprehensive Relief: CNC applies to all qualifying tax debt

Working with Tax Professionals

Benefits of Professional Help:

Expert Knowledge: Understanding of IRS procedures and standards
Proper Documentation: Ensuring complete and accurate financial disclosure
Negotiation Skills: Communicating effectively with IRS representatives
Strategic Planning: Coordinating CNC with long-term tax resolution

When to Seek Help:

Complex financial situations
Multiple income sources or business ownership
Previous CNC applications denied
Combination with other relief options needed

If you're wondering do I owe the IRS or need to verify tax relief options, professional assistance can help clarify your situation and determine the best approach.

Planning for the Future

While in CNC Status:

Improve Financial Situation: Work toward financial recovery
Plan for Resolution: Consider long-term tax debt solutions
Maintain Compliance: Stay current with all tax obligations
Monitor Statute of Limitations: Track collection statute expiration

Preparing for CNC Termination:

Income Monitoring: Track increases in income or assets
Alternative Planning: Prepare for installment agreement or OIC
Professional Consultation: Work with tax professional on exit strategy

Long-Term Strategies:

Offer in Compromise: When financial situation stabilizes
Installment Agreement: If income increases but remains limited
Statute of Limitations: Wait for collection statute to expire
Combination Approach: Use multiple strategies over time

Common Mistakes to Avoid

Application Mistakes:

Incomplete Documentation: Failing to provide all required information
Overstating Expenses: Claiming non-allowable or excessive expenses
Understating Income: Failing to report all income sources
Poor Communication: Not responding to IRS requests promptly

Maintenance Mistakes:

Non-Compliance: Failing to file returns or pay current taxes
Unreported Changes: Not notifying IRS of financial improvements
Ignoring Reviews: Failing to respond to periodic review requests
Lack of Planning: Not preparing for eventual CNC termination

Conclusion

Currently Not Collectible status can provide crucial temporary relief from IRS collection activities when you're experiencing genuine financial hardship. While it's not a permanent solution to tax debt, CNC status gives you breathing room to recover financially and plan for long-term resolution.

Success with CNC status requires thorough documentation of your financial hardship, complete compliance with IRS requirements, and strategic planning for the future. The key is demonstrating that collection would prevent you from meeting basic living expenses while maintaining hope for eventual financial recovery.

Remember that CNC status is a legitimate IRS program designed to provide relief to taxpayers facing genuine hardship. If you qualify, don't hesitate to pursue this option to protect yourself from aggressive collection actions while you work toward financial stability.

Whether CNC status is temporary relief while you explore other options or a longer-term solution until your situation improves, it can provide the protection you need to regain control of your financial life and plan for a better future.