Taxes
Currently Not Collectible status: when the IRS agrees you cannot pay
Currently Not Collectible status means the IRS has reviewed your finances and agreed that collecting now would leave you unable to meet basic living expenses. It stops levies and active collection. It does not erase the debt: interest and penalties continue, refunds are kept, and the IRS reviews your situation periodically. For many people it is the right tool while the ten-year collection statute runs.
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How the IRS decides
You submit a financial statement (Form 433-F or 433-A) showing income, expenses and assets. The IRS compares your expenses to its national and local standards. If your income minus allowable expenses leaves nothing to pay, you qualify. Assets with equity (a paid-off car, savings, a second property) can be a problem.
What happens next
The IRS codes your account as CNC and stops collection. It may file a Notice of Federal Tax Lien to protect its claim. It reviews your income periodically, often when a tax return shows higher income, and can reinstate collection if your situation improves.
Questions people ask
- Is CNC the same as the debt being forgiven?
- No. The debt stays and grows with interest. But the IRS has ten years from assessment to collect, and debt that reaches the end of that period while you are in CNC expires.
- Can I get CNC if I own a home?
- Sometimes. Equity in a home counts as an asset, but the IRS does not generally force a sale. It depends on the equity and your overall picture.