How to Obtain Currently Non-Collectible (CNC) Status

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When facing financial hardship, individuals may find it challenging to meet their tax obligations to the Internal Revenue Service (IRS). In such situations, the IRS offers relief through a status known as Currently Non-Collectible (CNC), which temporarily suspends collection activities on outstanding tax debts. Obtaining CNC status can provide much-needed breathing room for individuals experiencing financial difficulties.

In this article, we'll explore the process of obtaining Currently Non-Collectible status and the requirements for eligibility.

1. Understanding Currently Non-Collectible (CNC) Status:

Currently Non-Collectible (CNC) status is a designation granted by the IRS to taxpayers who are unable to pay their tax debts due to financial hardship. When a taxpayer's account is classified as CNC, the IRS temporarily suspends collection activities, including levies, garnishments, and seizures, until the taxpayer's financial situation improves.

2. Eligibility Criteria for CNC Status:

To qualify for Currently Non-Collectible status, taxpayers must demonstrate financial hardship and an inability to pay their tax debts. The IRS considers various factors when evaluating eligibility for CNC status, including:

  • Income: The taxpayer's income must be insufficient to cover necessary living expenses and basic needs, leaving little or no disposable income to apply towards tax payments.
  • Assets: The taxpayer's assets, including bank accounts, investments, and property, are evaluated to determine if liquidation would provide sufficient funds to satisfy the tax debt.
  • Expenses: The taxpayer's allowable expenses, such as housing, utilities, transportation, and medical costs, are compared to their income to assess financial hardship.
  • 3. Applying for CNC Status:

To request Currently Non-Collectible status, taxpayers must submit a financial statement, typically using IRS Form 433-F or Form 433-A, along with supporting documentation to substantiate their financial hardship. The financial statement provides detailed information about the taxpayer's income, expenses, assets, and liabilities.

4. Providing Supporting Documentation:

When applying for CNC status, taxpayers are required to provide supporting documentation to verify their financial situation. This may include:

  • Pay stubs or income statements
  • Bank statements
  • Asset valuations (e.g., real estate appraisals)
  • Monthly expense statements (e.g., utility bills, rent/mortgage statements)
  • Medical bills or documentation of significant medical expenses

5. Communicating with the IRS:

After submitting the financial statement and supporting documentation, taxpayers may be required to communicate with the IRS to provide additional information or clarify any questions regarding their financial situation. It's essential to respond promptly to any requests from the IRS and maintain open communication throughout the process.

6. Evaluating Alternatives:

While Currently Non-Collectible status provides temporary relief from collection activities, it does not eliminate the underlying tax debt. Taxpayers should explore alternative options for resolving their tax obligations, such as:

  • Setting up an installment agreement to pay the tax debt over time
  • Requesting an offer in compromise to settle the tax debt for less than the full amount owed
  • Seeking penalty abatement or other forms of relief

7. Seeking Professional Assistance:

Navigating the process of obtaining Currently Non-Collectible status can be complex, and taxpayers may benefit from seeking professional assistance from tax professionals, enrolled agents, or tax attorneys. These professionals can provide guidance on the CNC application process, review financial statements for accuracy and completeness, and represent the taxpayer in communications with the IRS.

In conclusion, Currently Non-Collectible (CNC) status offers temporary relief from IRS collection activities for taxpayers experiencing financial hardship. By understanding the eligibility criteria, submitting a comprehensive financial statement, and providing supporting documentation, taxpayers can increase their chances of obtaining CNC status and gaining relief from tax debts. Seeking professional assistance and exploring alternative options for resolving tax obligations are essential steps in achieving long-term financial stability.


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