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  • Writer's picturevasil baychev

IRS Relief - CNC( Currently Not Collectable)


Are you struggling to pay your tax liabilities to the IRS? Do your tax debts exceed your monthly savings? If so, you might consider opting for Currently Non-Collectible (CNC) status, a provision offered by the IRS that temporarily halts collection efforts. This status can provide significant relief, giving individuals time to manage their finances without the immediate pressure of IRS collections.

In this article, we discuss the eligibility criteria and how to get the CNC status, along with its pros and cons. In order to protect yourself from bankruptcy and mitigate the threat of heavy penalties, you need to hire tax experts at V-Tax Services. Our professionals fulfill the criteria of CNC and deal with the IRS on your behalf so that you can achieve peace of mind relief.

What is Currently Not Collectible (CNC) Status?

CNC status is granted by the IRS to taxpayers who demonstrate that they cannot pay their tax debts due to financial hardship. When your account is marked as CNC, the IRS temporarily suspends all collection activities, including placing claims on property, garnishing wages, and seizing bank accounts.

However, interest and penalties on unpaid taxes keep increasing, and any future tax refunds will be used to pay off the debt. Additionally, the IRS is still legally required to send you tax bills even when your account is in CNC status.

Who is Eligible For Currently Not Collectible Status?

To qualify for CNC status, taxpayers must demonstrate that they cannot make monthly payments on their tax debt. Eligibility for CNC is based on the following criteria:

Income: You must disclose your gross monthly income, including earnings before taxes and other deductions.

Expenses: You need to list essential monthly expenses, such as living costs, healthcare needs, and work-related expenses.

Assets: The IRS requires information about assets that can be quickly converted to cash to determine how much you can pay toward your tax debt immediately.

Debt: You must calculate your total tax debt owed to the IRS.

If your necessary monthly expenses are more than your income and you have less money than your tax debt, you are probably eligible for CNC status. However, if your financial situation improves, especially if your income exceeds your expenses, the IRS may remove you from CNC status and expect you to resume payments.

Ten-Year Statute of Limitations:

The IRS has a 10-year period from the date the tax was assessed to collect the debt. If the IRS fails to collect the debt within this period, the debt is typically forgiven. Unlike Offer In Compromise (OIC), CNC status does not stop the clock on this 10-year period, meaning the time continues to tick down while you are in CNC status.

Potential Debt Expiration:

If your financial hardship persists and the 10-year statute of limitations expires, the remaining tax debt may be forgiven, relieving you of the obligation to pay.

Document Needed to Apply For CNC Status

To apply for CNC status, you must provide comprehensive documentation to prove your financial hardship. This includes:

Paycheck Stubs: Copies of your most recent paycheck stubs from each job for the past month.

Income Statements: Copies of the most recent statements showing all monthly income you receive.

Real Estate Tax Bills: Copies of the most recent real estate tax bills for all properties owned, even if jointly owned.

Utility Bills: Copies of utility bills, including electricity, water, sewer, gas, and phone bills.

Lease or Mortgage Statements: Copies of your lease agreement or mortgage statement showing your monthly rent or mortgage payment.

Credit Card Statements: Copies of the most recent statements for all credit cards.

Personal Property Tax Bills: Copies of the most recent personal property tax bills for each car you own.

Proof of Assets: Proof of assets such as stocks, bonds, and other investments.

Monthly Expenses: Proof of monthly expenses related to food, necessities, daycare, medical costs, and court-ordered payments like child or spousal support.

If you are married, you need to submit the above information for both spouses.

How Do I Apply for CNC Status With the IRS?

We have explained each step very simply to apply for Currently Not Collectible (CNC) status with the IRS:

1. Eligibility: Show proof of financial hardship to qualify for CNC status.

2. Tax Compliance: Ensure all required tax returns are filed and up to date.

3. Forms to Submit: Complete and submit the appropriate form:

○ IRS Form 433-F (for individuals)

○ IRS Form 433-A (for wage earners and self-employed)

○ IRS Form 433-B (for businesses)

These forms provide detailed information about your financial situation, including assets, debts, income, and expenses.

4. Financial Information: Provide details such as bank account balances, property values, credit card debts, employment details, and living expenses.

5. IRS Review: The IRS will review your forms to assess your ability to pay taxes. They may request additional documents to support your financial hardship claim.

6. Ongoing Tax Compliance: Even under CNC status, continue filing your annual tax returns. If applicable, make estimated tax payments and federal tax deposits.

By following these steps, you can apply for CNC status with the IRS if you face financial difficulty meeting your tax obligations. For your ease, V-Tax Services experts can help you to apply for CNC by meeting all the requirements of the IRS.

IRS Review Process

If the IRS determines that you cannot pay your taxes, they will grant you a Currently Not Collectible (CNC) status. This temporarily stops all collection efforts. It is important to understand that CNC status is not a permanent solution. It doesn't stop penalties, interest, or federal tax claims from being added up. Following are the pros and cons of CNC status awarded by the IRS.

Pros And Cons of IRS CNC Status

Pros of CNC Status Cons of CNC Status Provides relief from immediate IRS collection actions such as levies on wages or bank accounts. Federal tax claims may still be placed on your property, which could affect your ability to sell or refinance it. If the IRS fails to collect the tax debt within the 10-year statute of limitations, you will not have to pay the debt. Interest and penalties on unpaid taxes keep adding up, potentially increasing the total amount owed over time. Offers temporary relief from paying taxes if you are unable to afford it currently. CNC status is not a permanent solution; the IRS will periodically review your financial situation to assess your ability to pay. Particularly beneficial if you have a fixed income (e.g., disability, pension, Social Security), as financial reviews typically do not affect this status. You must continually demonstrate financial hardship to maintain CNC status; any increase in income could lead to loss of CNC status and reinstatement of IRS collection efforts. Stops wage deductions and bank account freezes during the CNC period. Allows for potential expiration of tax liabilities if not collected within the statute of limitations. Interest and penalties on unpaid taxes continue to accrue during the CNC period, potentially increasing the total amount owed over time.

Maintaining CNC Status Maintaining

CNC status requires ongoing demonstration of financial hardship. The IRS will periodically review your financial situation to ensure you still qualify. Any significant increase in income or decrease in expenses could lead to the loss of CNC status, and the IRS may resume collection efforts. It is important to keep detailed records of your financial situation, and it is better to hire V-Tax Services to respond to any IRS requests for information.

How Can We Help You?

CNC status helps people stabilize their finances, cover necessary living costs, and address their tax debt over time. It is important to consult with a tax professional such as V-Tax Services to fulfill the eligibility criteria and understand how to qualify and apply for CNC status. Our experts at V-Tax Services help you achieve the CNC status according to your financial situation, or if needed, they propose another suitable option to reduce your tax burden. It is important to actively seek lasting solutions to your financial issues in compliance with the IIRS resolutions. Contact us for a long-lasting IRS Resolution to your tax liabilities.

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