Currently Not Collectible
The following page is for informational and educational purposes only. It is not legal advice and it does not create an attorney-client relationship with our clinic. If you need help please Contact Us.
Change the status of your account to ‘Currently Not Collectible’
When the IRS recognizes your inability to cover both taxes and basic living expenses, they may place your account in Currently Not Collectible (CNC) status, where the IRS generally refrains from collecting. Interest and penalties will still accrue, and you might receive an annual bill and any refunds could be applied to your debt.
Do you qualify?
To determine eligibility, contact the IRS by phone at 800-829-1040. The IRS may request past tax returns and financial information to assess your situation. Documentation may also be needed to support your financial details.
Applying for CNC satus
During the application process, file any overdue returns and complete required forms that the IRS may request. Maintain timely Estimated Tax Payments and Federal Tax Deposits. Don’t IRS notices; if opting for for NC status, file returns, and seek free filing options if needed.
Understanding the impact and planning for the future
If the IRS grants CNC status, be aware that they may keep tax refunds. However, voluntary payments are still an option, and your assets and income won’t be levied unless new federal tax liabilities arise. Understand the potential impact on your credit and ability to sell assets. Stay proactive by keeping up with tax changes and using IRS tools, such as the withholdings calculator, to prevent future tax issues. If you receive a notice about your tax bill, promptly contact the IRS to discuss your financial situation and consider adjusting your withholding for future tax obligations.