Currently NOT COLLECTIBLE

If you can’t afford to pay your back taxes through an installment agreement or an offer in compromise, you may qualify for currently-not-collectible (CNC) status.

“Currently not collectible” means exactly what it sounds like – the IRS will not take collection actions against you while your CNC status is in place.

It’s important to know that CNC status offers only a temporary solution, one where the IRS agrees to delay collection until your financial situation improves. Being currently not collectible does not erase your tax bill nor does it absolve you from paying your back taxes indefinitely. It simply means the IRS has determined you cannot afford to pay your past-due taxes at this time and, therefore, they’re willing to give you some extra time to get back onto better financial ground.

Prior to approving your request to delay collection, the IRS typically requires you to complete a Collection Information Statement to prove your financial status. Among other things, they may ask for documents pertaining to your income, assets, and expenses; and may require you to file any past-due tax returns.

Be advised that the IRS can continue to add penalties and interest to your tax bill while you’re in CNC status. They can also file a Notice of Federal Tax Lien against you (a step the agency takes to help ensure taxpayers eventually pay their back taxes), and they may apply your future tax refunds towards your outstanding bill as well.

Taxpayers can submit a CNC request directly to the IRS, although it often helps to consult with a tax attorney or similarly qualified tax professional. Like many tax issues, an experienced tax professional can help with navigating the CNC submission process and help ensure all the proper “i’s” have been dotted and “t’s” crossed.