How to get Currently Not Collectible Status from the IRS

Taxpayers who have no ability to make monthly payments towards their tax debt can request that the IRS place their account in currently not collectible (CNC) status.

While a taxpayer’s account is placed as currently not collectible, the IRS will not levy or attempt to collect the debt. Taxpayers who are are temporarily out of work are good candidates for currently not collectible.

In order to be considered for CNC status, the taxpayer must have filed all tax returns that are due and must be current on estimated tax payments for the current period.

The IRS will determine whether a taxpayer qualifies for CNC by completing a financial analysis. You’ll be required to report your assets, income, and expenses on Form 433-A or 433-F.

What happens to your debt when you are currently not collectible?

It is important to understand that CNC does not wipe out your tax debt. It merely stops the IRS’ efforts to collect it while you are in CNC status.

Also, penalties and interest continue to accrue while you remain in CNC status.

The 10 year statute of limitations for the IRS to collect the debt continues to run.

Will the IRS file a lien?

CNC does not prevent the IRS from filing a lien. If the balance is above $10,000 the IRS may file a lien.

However, the IRS may not levy assets and must release any active levies.

Will you still get your tax refunds?

Any tax refunds you are owed while you are in currently not collectible status will be applied to your tax debt.

How does the IRS determine whether you qualify for currently not collectible?

The IRS will complete a financial analysis based on information you provide on Form 433 or Form 433-a. Sometimes, the information will be provided over the phone to the IRS representative.

On the financial analysis, the IRS will consider your monthly income from all sources, and they will allow you a combination of standard and actual expenses based on your location and household size.

The IRS may request documentation to verify your income and expenses.

At the end of the analysis, the IRS will determine whether you have the ability to pay.

How long do you remain in currently not collectible status?

The IRS will periodically review taxpayers placed in currently not collectible to determine if their financial situation has changed and if they’re able to now make monthly payments.

As long as your financial situation remains the same, you can remain in currently not collectible status.

You should always consult with a tax professional before making any decisions about how to best resolve your particular matter.

2 thoughts on “How to get Currently Not Collectible Status from the IRS”

  1. My son has long haul covid for the past 16 months and has no way to pay past taxes. He was in “Currently not collectable” Status since I filed his back taxes in 2011 from years 2006-2011. Since I was his CAF and filed his back taxes, any refund he was owed was seized and applied to his past taxes.
    I have read that taxes aren’t collectable after 10 years of non-payment. He has not made any payments on his past taxes since 2006 except for the IRS seizing his refunds. Since 2011 there have been 7 years where he made less that $10,000 and they still took any refunds. Can you help me understand why this is happening?
    This year he is owed $1,400 and he really needs this money. How can he keep the IRS from taking his refund?

    Reply
    • I would check the statute of limitations. If you call the IRS, they’ll provide you the collections statute of limitations date for each year that he owes.

      Even if you’re in currently not collectible, the IRS will apply any refunds to back taxes. You can see if your son qualifies for an offer-in-compromise which would prevent his future refunds from being applied to the back taxes. You might reach out to a tax professional.

      Reply

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