Currently Not Collectible Status

Do you agree that you owe the IRS past due taxes, but they are garnishing your paystub and you can’t provide for your family? If the IRS agrees that you can't afford to pay both your taxes and your essential living expenses, your account may be marked as Currently Not Collectible (CNC).

Why Currently Not Collectible (CNC) is Helpful

• While in CNC status the IRS won’t actively try to collect from you. That includes levying your bank account and garnishing your wages.
• It will remove any levies that are currently in place.
• It’s relatively quick to get placed into CNC Status as opposed to an Offer In Compromise.

The Downsides of Currently Not Collectible

• The IRS will file a Lien to protect their interest in the money owed to them.
• Interest and penalties will continue to accrue on your past due taxes.
• Any refund you get while you still owe the balance will be applied to your debt.

Requirements for CNC

All your tax returns must be filed and up to date.

What Steps do I need to take to be Placed into Uncollectible Status?

When you apply for CNC status, the IRS may ask for financial information. They will conduct an assessment of your income and expenses, and make a determination of whether you can sell any assets or take out a loan to pay off the debt.

To prove economic hardship the IRS will require you to fill out one of three forms.

1. 433-F (Collection Information Statement). This form will ask for detailed information on your assets, debts, income and expenses.
2. 433-A (Collection Information Statement for Wage Earners and Self-Employed Individuals).
3. 433-B (Collection Information Statement for Businesses)

In all of these scenarios, the IRS will requests supporting documentation to back up the information you provide on the forms.

IRS National Standards

Just because you think you do not have the ability to pay your tax obligation doesn't mean the IRS will agree. The Internal Revenue Service has an extremely restricted definition of what people should spend on living expenses.

The IRS has established guidelines for food, clothing, shelter, and other critical costs for persons in various parts of the country; if your expenses exceed these limits, the IRS will normally ignore your request for uncollectible status.

You can view the IRS national standards at the IRS website.

For specific circumstances, the IRS makes exceptions. For example, If you student loans, the IRS will take these into consideration while examining your application. A tax attorney has extensive expertise negotiating with the Internal Revenue Service and a solid understanding of the IRS's permissible living expenditures. They can frequently assist you in obtaining the most extensive exemptions available for your situation.

How to Contact the IRS

If the IRS sent you a notice in the mail, use the contact information within. If you do not have a notice or can’t find one, call the number that fits your situation:

-      Individual taxpayers call 800-829-1040

-      Business taxpayers call 800-829-4933

What to do if IRS Rejects Your Hardship Request

You can request a meeting with an IRS collection manager if the IRS refuses to categorize your account as uncollectible. You can also file an appeal against the IRS's collection actions. Alternatively, you could get assistance from a tax attorney.

How Long does the IRS have to Collect the Taxes

Most tax liabilities expire ten years after they are assessed or ten years after the filing deadline. The Collection Statute Expiration Date (CSED) is the date on which the past due taxes will expire. When placed into CNC, the CSED does not extend.

Certain actions can help to lengthen the CSED. If you apply for an offer in compromise, for example, the CSED clock will stop running while the IRS examines your application, but it will resume after it is authorized or denied.

Similarly, if you declare bankruptcy, the clock will be momentarily stopped, and the time will be added on. The IRS may require taxpayers to sign a waiver to prolong the CSED in some instances. Ideally, you should never sign an agreement like this without first consulting a tax attorney.

Need Tax Help to get Placed into Currently Non Collectible Status

The IRS can put you in severe economic hardship with their collection tactics. If you can't afford to pay your tax debt contact us to learn more about CNC and other options for dealing with back due taxes.