Currently Non-Collectible Status

• If you’re unable to pay your tax debt due to financial hardship, the Currently Non-Collectible (CNC) status may temporarily stop IRS collection actions.
• CNC does not erase your tax liability, but it suspends levies, garnishments, and other enforcement while you’re unable to pay.
• The Law Offices of Michael Raff provides experienced legal guidance to help taxpayers obtain CNC status and avoid aggressive collection activity.

If you’re facing mounting tax bills from the IRS and simply don’t have the income or assets to make payments, you’re not alone. Many individuals and businesses find themselves in difficult financial situations due to job loss, illness, or other economic hardship. The good news? The IRS recognizes that not all taxpayers can afford to pay their tax debt immediately.

That’s where Currently Non-Collectible (CNC) status comes in. For those who may not qualify for an Offer in Compromise, CNC may offer temporary relief from IRS collection actions without requiring a formal settlement or payment plan.

As experienced tax debt lawyers serving Illinois, we help clients explore their eligibility for CNC, prepare the proper forms, and advocate before the IRS to secure this important status. 

If you’re overwhelmed by tax liability and need a pause in enforcement, this may be the right option for you.

What Is Currently Non-Collectible Status?

Currently Non-Collectible (CNC) is a temporary IRS designation for taxpayers who are experiencing genuine financial hardship and cannot afford to make any payments toward their tax balance.

Here’s what CNC does:

It pauses IRS-enforced collection activity, including bank levies and wage garnishments, preventing aggressive enforcement while your financial condition shows that you cannot afford to make monthly payments to the IRS.

It does not erase the debt. The full tax liability, including interest and penalties, will continue to accrue. In addition, the IRS will file a Notice of Federal Tax Lien to protect its interest in property you own against other creditors.

The IRS typically determines CNC eligibility based on the Collection Information Statement (Form 433-F or 433-A), which evaluates your income, expenses, assets, and overall ability to pay. Once you are granted CNC, the IRS agrees to forego additional collection potential for a period of time.

The status is temporary. The IRS can revisit your case periodically (usually every two years) to determine if your financial condition has improved.

Who Qualifies for CNC Status?

To qualify for CNC, a taxpayer must demonstrate that paying the IRS would create a financial hardship. In other words, your monthly income must be less than the amount needed to cover basic living expenses under IRS allowable national standards.

Common eligibility factors include:

• Submit a Collection Information Statement showing you have no disposable income after allowable living expenses.
• Having no significant assets that could be liquidated without creating further hardship.
• You are not in active bankruptcy proceedings.

Notably, CNC is the one IRS-eligible resolution that does not require a taxpayer to have all required returns on file with the Service. For example, if you need to catch up on your filing but otherwise qualify for CNC, you can enter a CNC status to prevent collection activity in the short term while preparing for a different ultimate resolution, such as an Offer in Compromise.

At The Law Offices of Michael Raff, we review your income, expenses, financial assets, and tax filing history to determine if CNC is the best resolution strategy, and we make sure the IRS sees the full picture.

Our Process for Helping You Obtain CNC Status

Securing CNC status isn’t as simple as checking a box on a form. The IRS will expect detailed financial documentation and may request additional proof to back up your claims. This is where legal representation becomes crucial.

Here’s how we help:

1. Evaluate Eligibility

We assess your financial situation, including a review of tax returns filed and balances due, assets such as bank, retirement, and investment accounts, valuation of property, monthly gross income, and expenditures, ultimately helping to determine if CNC is a viable option.

2. Complete and Submit IRS Forms

We assist you in preparing IRS Form 433-F or Form 433-A, also known as the Collection Information Statements. These forms must be accurate, thorough, and well-supported.

3. Communicate With the IRS

We handle all communication and negotiation with the IRS on your behalf so you don’t have to worry about saying the wrong thing or providing incomplete information.

4. Prepare for Follow-Up or Review

The IRS may revisit your status in the future. We help you understand your rights, obligations, and the potential next steps, including transitioning to an installment agreement or an Offer in Compromise at the appropriate time.

With our legal guidance, you can avoid collection actions, reduce stress, and gain time to stabilize your finances.