If you’re facing IRS collection notices, wage garnishment threats, or bank levies — but truly can’t afford to pay your taxes — you may qualify for Currently Not Collectible (CNC) status. This program temporarily halts all IRS collection activity, giving you financial breathing room until your situation improves. It’s not debt forgiveness, but it’s one of the most powerful forms of IRS relief available for taxpayers in genuine hardship.
What Is IRS Currently Not Collectible (CNC) Status?
“Currently Not Collectible” (also known as Hardship Status) means the IRS has determined you cannot pay your tax debt without creating financial hardship.
Once approved:
- All collection actions (such as levies, liens, and wage garnishments) stop.
- The IRS suspends active collection efforts.
- You’re still legally responsible for the debt, but payment is deferred.
Interest and penalties continue to accrue, but no payments are required as long as your hardship remains.
📘 Official Resource: IRS Currently Not Collectible Policy
When to Request CNC Status?
You should request Currently Not Collectible status if:
- You can’t pay both basic living expenses and your tax debt.
- Your wages are barely covering rent, food, and utilities.
- You’re unemployed or recently lost income.
- You have major medical expenses, disabilities, or dependents relying on your support.
CNC status is especially common after major life disruptions — such as illness, divorce, or business failure — when paying taxes would make meeting daily needs impossible.
How to Qualify for CNC?
To qualify, the IRS must verify that paying your tax debt would cause undue financial hardship. They evaluate your entire financial picture, including:
- Income (wages, Social Security, pensions, etc.)
- Necessary living expenses (rent, food, transportation, medical costs)
- Assets (home equity, vehicles, savings)
If your allowable expenses equal or exceed your income, the IRS may grant CNC status.
📘 Reference: IRS Collection Financial Standards
The Application Process
1️⃣ Gather Financial Information
Before contacting the IRS, organize your financial documents:
- Recent pay stubs or proof of income
- Bank statements (last three months)
- Rent/mortgage and utility bills
- Proof of medical expenses or child care costs
2️⃣ Contact the IRS or File Forms
You can request CNC status by:
- Calling the IRS directly, or
- Submitting Form 433-A (Collection Information Statement) for individuals, or Form 433-F for simpler cases
These forms outline your income, assets, and expenses, helping the IRS determine your ability to pay.
3️⃣ Await Review
Once submitted, the IRS reviews your finances. This process can take several weeks. You may receive follow-up calls or letters requesting clarification.
During review, collection activity is typically paused — especially if you’re working with a tax professional or representative.
📘 Form Resource: IRS Form 433-A (Collection Information Statement)
What Happens After You’re Approved?
When your request is accepted, the IRS updates your account as Currently Not Collectible.
Here’s what that means in practice:
Collections Stop
No levies, garnishments, or seizures while you’re in CNC.
Interest Still Accrues
The IRS will continue to add interest and penalties to your balance.
Annual Financial Review
The IRS periodically reviews your financial situation (usually once every 1–2 years). If your income rises significantly, your status may be revoked.
Statute of Limitations Clock Keeps Running
The IRS generally has 10 years from the date of assessment to collect a tax debt. CNC status doesn’t pause that clock — so in some cases, your debt may expire while you’re in hardship status.
📘 Reference: IRS Statute of Limitations on Collections
Advantages of CNC Status
- Immediate Relief: Stops IRS levies, garnishments, and seizures.
- No Payments Required: As long as hardship continues.
- Statute of Limitations Continues: Debt may expire if 10 years elapse.
- Preserves Basic Living Needs: IRS acknowledges your inability to pay essentials.
- Pathway to Long-Term Solutions: You can later transition to a payment plan or an Offer in Compromise.
Disadvantages and Limitations
- Interest and Penalties Continue: Your balance grows while you’re in CNC.
- No Permanent Forgiveness: It’s temporary relief — not debt cancellation.
- Annual Reviews: The IRS may revoke CNC if your financial situation improves.
- Liens May Still Be Filed: Even if payments are suspended, a Notice of Federal Tax Lien can be filed to secure the debt.
What to Do While in CNC Status?
While your account is protected, it’s smart to:
- File all future returns on time. Staying compliant prevents the IRS from revoking your status.
- Keep detailed records. Track income and expenses for your annual reviews.
- Avoid new tax debts. Falling behind again could disqualify you from future relief.
- Monitor your balance. Use the IRS Online Account to check for status changes.
After a few years, if your situation hasn’t improved, you can explore a settlement through an Offer in Compromise or other reduction programs.
How a Tax Attorney Can Help?
Applying for CNC may sound simple, but the IRS reviews financial disclosures rigorously — and one error can lead to rejection or enforced collection.
A tax attorney can:
- Prepare accurate financial statements using IRS standards
- Communicate directly with Revenue Officers
- Prevent premature levies during review
- Ensure your hardship claim aligns with IRS financial guidelines
- Develop a long-term plan (e.g., transition to Offer in Compromise or payment plan later)
⚖️ Pro Tip: Professional representation also gives you breathing room — once your attorney files a Power of Attorney (Form 2848), the IRS must contact them directly, not you.
📘 Reference: IRS Form 2848 — Power of Attorney
Need help with a similar issue? Contact our firm today for a consultation.
The IRS’s Currently Not Collectible (CNC) program offers struggling taxpayers a vital reprieve — stopping collections while protecting essential income and assets. Although it doesn’t erase your tax debt, it gives you time to recover, regroup, and rebuild financial stability without the fear of losing your wages or bank account.
If you’ve received aggressive IRS letters but can’t afford to pay, CNC may be your best immediate solution. Contact Pelham PLLC today. Our experienced tax attorneys can evaluate your eligibility, prepare the required financial disclosures, and ensure you’re protected while navigating IRS hardship programs.
📘 Official Resource: IRS Currently Not Collectible Program
FAQs
How long does Currently Not Collectible status last?
CNC status lasts as long as you remain in financial hardship. The IRS typically reviews your case every 1–2 years.
Can the IRS still file a lien while I’m in CNC?
Yes. The IRS may file a Notice of Federal Tax Lien to secure its interest, even if no payments are required.
Does CNC stop interest and penalties?
No. Interest and penalties continue to accrue, but no payments are required during hardship.
Will CNC stop wage garnishment?
Yes. Once approved, all active garnishments and levies are lifted.
Can CNC turn into permanent relief?
If the 10-year statute of limitations expires while you’re in CNC, your debt may effectively expire.
