Currently Not Collectible Status
If you are experiencing severe financial difficulties and cannot afford to make payments on your federal tax liability, the IRS provides a temporary hardship status called Currently Not Collectible (CNC). When your account is placed in CNC status, the IRS suspends all active collection activities, such as wage garnishments and bank levies. While CNC status provides immediate relief from collections, it is not a debt forgiveness program; interest and late-payment penalties continue to accrue, and the IRS will monitor your income annually.
How CNC Hardship Status Functions
CNC status is a temporary suspension of IRS collection activities due to a documented financial hardship. To qualify, you must show that making any monthly payment on your tax debt would prevent you from covering your basic, necessary living expenses.
Once approved, the IRS halts all active collection actions. While in CNC status, you are not required to make monthly payments, and the IRS will not garnish your wages or levy your bank accounts, providing peace of mind.
Financial Disclosures and Exemption Rules
To qualify for CNC status, you must submit Form 433-F (Collection Information Statement) outlining your monthly household budget and assets. The IRS evaluates your budget using standard national and local expense guidelines.
If your household income is less than your allowable living expenses, and you have no significant assets that can be liquidated to pay the tax liability, the IRS will approve your request. They may file a tax lien to protect their interests, even if you are approved.
The 10-Year Collection Statute
The primary long-term benefit of CNC status is its interaction with the 10-year Statute of Limitations on tax collections, officially known as the Collection Statute Expiration Date (CSED). Under federal law, the IRS has exactly ten years from the date of assessment to collect a tax liability.
While your account is in CNC status, the ten-year clock continues to run. If the ten-year period expires while your account is classified as CNC, your tax liability is legally extinguished, resulting in complete debt relief.
Frequently Asked Questions
No. While CNC status suspends active collection actions, interest and failure-to-pay penalties continue to accrue on your outstanding balance, which will increase your total liability if your account is removed from CNC later.
Yes. While in CNC status, the IRS will seize your subsequent tax refunds and apply them to your outstanding tax liability under the Treasury Offset Program.
To request CNC status, contact the IRS collection department by phone and ask to be evaluated for financial hardship status. Be prepared to provide details about your income, assets, and monthly living expenses.
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