Currently Not Collectible Status: When the IRS Backs Off (2025)

Last Updated: December 2025

If you owe the IRS but genuinely can't afford to pay — not even a small monthly amount — you may qualify for Currently Not Collectible (CNC) status. This designation tells the IRS to pause collection activity because pursuing you would cause financial hardship.

CNC isn't debt forgiveness. Your balance remains, and interest continues accruing. But it stops the IRS from garnishing your wages, levying your bank account, or taking other enforced collection actions — giving you breathing room until your situation improves.

What Is Currently Not Collectible Status?

Currently Not Collectible is an IRS designation that temporarily halts active collection efforts. When your account is placed in CNC status:

• No levies on your wages or bank accounts
• No seizure of your property
• Collection calls and letters stop (mostly)
• Your debt remains on the books
• Interest and penalties continue accruing

The IRS places accounts in CNC when they determine that collecting would leave you unable to pay for basic living expenses — food, housing, utilities, transportation, medical care.

This isn't a program you "apply for" in the traditional sense. It's a status the IRS assigns after reviewing your financial situation and concluding that you have no ability to pay.

Who Qualifies for CNC Status?

CNC is for people experiencing genuine financial hardship. You may qualify if:

Your Income Barely Covers Basic Expenses

The IRS compares your income against "allowable expenses" using national and local standards. If your income minus these allowable expenses equals zero (or negative), you likely qualify.

Allowable expenses include: - Housing (rent/mortgage, property taxes, insurance, utilities) - Food and household supplies - Clothing - Transportation (car payment, insurance, fuel, public transit) - Health insurance premiums - Out-of-pocket medical expenses - Court-ordered payments (child support, alimony) - Current tax obligations

Not typically allowed: - Credit card payments - Tuition (in most cases) - Voluntary retirement contributions - Entertainment, vacations, hobbies

Common CNC Situations

✅ Fixed income — Social Security or disability with minimal other assets

✅ Job loss or income reduction — Recently unemployed or underemployed

✅ Medical crisis — Significant ongoing medical expenses

✅ Supporting dependents — Income stretched thin by family obligations

✅ Already judgment-proof — No wages to garnish, no assets to seize

What Happens to Your Debt in CNC Status?

Your tax debt doesn't disappear. Here's what happens while you're in CNC:

Interest Keeps Accruing

The failure-to-pay penalty (0.5% per month) and interest (currently ~8% annually) continue adding to your balance. A $20,000 debt can grow significantly over several years.

The 10-Year Clock Keeps Ticking

The IRS has 10 years from the date of assessment to collect a tax debt. This is called the Collection Statute Expiration Date (CSED). Time spent in CNC status counts toward this 10-year period.

This is important: If you remain in CNC until the CSED expires, the remaining debt is legally uncollectible and gets written off.

Tax Refunds Are Offset

Even in CNC status, the IRS will seize any tax refunds you're owed and apply them to your balance. If you're in CNC, adjust your withholding so you don't overpay throughout the year.

Periodic Review

The IRS may review your financial situation periodically (often every 1-2 years, sometimes longer). If your income increases or circumstances change, they may remove CNC status and resume collection.

How to Request CNC Status

Step 1: Gather Financial Documentation

Before contacting the IRS, collect: - Recent pay stubs or proof of income - Bank statements (last 3 months) - Monthly expense documentation (rent/mortgage, utilities, etc.) - Proof of any hardship (medical bills, unemployment documentation)

Step 2: Contact the IRS

By phone: Call the number on your most recent IRS notice, or the general collection line at 800-829-1040.

In response to a notice: If you've received a collection notice, respond by the deadline and explain you cannot pay due to financial hardship.

Through a representative: An Enrolled Agent, CPA, or tax attorney can contact the IRS on your behalf.

Step 3: Financial Disclosure

The IRS will likely ask you to complete Form 433-F (Collection Information Statement) or provide equivalent information verbally. This form documents: - All sources of income - Monthly living expenses - Bank account balances - Assets (home, vehicles, investments)

Be thorough and accurate. The IRS will verify information and may request documentation.

Step 4: IRS Analysis

The IRS revenue officer or representative will: 1. Calculate your total monthly income 2. Subtract allowable expenses (using IRS standards) 3. Determine if any "disposable income" remains

If the result shows you can't afford any payment without hardship, they'll place your account in CNC status.

Step 5: Confirmation

You should receive written confirmation that your account has been placed in CNC status. Keep this documentation.

What "Allowable Expenses" Really Means

The IRS doesn't let you claim unlimited expenses. They use standardized amounts:

National Standards (Same Everywhere)

• Food, clothing, household supplies, personal care
• Out-of-pocket healthcare costs

Local Standards (Vary by Location)

• Housing and utilities (based on county and family size)
• Transportation (based on region)

Actual Expenses Considered

• Health insurance premiums (actual amount)
• Court-ordered payments (actual amount)
• Childcare necessary for work (actual amount)

Example: If you live in Miami and pay $2,500/month rent, but the IRS local standard for your county and family size is $1,800, they may only allow $1,800 in their calculation — even though your actual expense is higher.

This is where having professional help can matter. An experienced representative knows how to document expenses properly and when exceptions to standards might apply.

CNC vs. Other Options

CNC vs. Installment Agreement

If you can afford even a small payment, an installment agreement may be better — it shows good faith and may avoid a federal tax lien.

CNC vs. Offer in Compromise

If you have some assets or future earning potential, the IRS may prefer you pursue an OIC or partial payment plan rather than CNC.

The Strategic Value of CNC

For some taxpayers, CNC status is actually the best long-term strategy:

Running Out the Clock

Remember the 10-year Collection Statute. If you're placed in CNC status at age 62 with a $50,000 debt, and remain in CNC until you're 72, the debt expires — legally uncollectible.

Example scenario: - Tax assessed in 2020, CSED = 2030 - CNC status granted in 2021 - Taxpayer remains in hardship until 2030 - Debt expires; balance written off

Protecting Limited Income

If your only income is Social Security or disability benefits, these are largely protected from IRS levy anyway. CNC status formalizes this protection and stops collection notices.

Buying Time for Financial Recovery

CNC can provide breathing room while you: - Recover from job loss - Deal with medical issues - Get back on your feet financially

Once stable, you can proactively contact the IRS to set up a payment plan.

Potential Downsides of CNC Status

Federal Tax Lien

Even in CNC status, the IRS may file a Notice of Federal Tax Lien if your debt exceeds $10,000. This: - Becomes public record - Affects your credit score - Can complicate selling property or getting loans

Growing Balance

Interest and penalties don't stop. A $30,000 debt can grow to $50,000+ over several years in CNC status.

Periodic Review

Your situation will be reviewed. If you get a better job, inherit money, or otherwise improve financially, the IRS can remove CNC status and resume collection.

Refund Seizure

Any tax refund you're owed will be taken. Plan your withholding accordingly.

How Long Does CNC Status Last?

There's no fixed duration. CNC status continues until:

1. Your financial situation improves — The IRS determines you can now make payments
2. The CSED expires — Your 10-year collection period ends
3. You proactively set up a payment plan — You contact the IRS when you're able to pay
4. The IRS reviews and removes it — Based on updated financial information

For many people on fixed incomes (retirees, disabled individuals), CNC status effectively becomes permanent, and the debt expires at the CSED.

Professional Help: When It Matters

You can request CNC status yourself by calling the IRS. However, professional help may be valuable if:

• You're nervous about IRS calls — A representative handles communication
• Your situation is complex — Multiple tax years, business taxes, or unusual circumstances
• You've been denied before — A professional may present your case more effectively
• You want to explore all options — CNC might not be your best path
• You're facing active collection — Levies or liens already in place need immediate attention

A qualified Enrolled Agent or tax professional can often resolve CNC requests more quickly and ensure your expenses are documented to maximize your chances.

Key Takeaways

1. CNC is for genuine hardship — When you can't afford basic living expenses after paying taxes
2. Debt doesn't disappear — Interest continues, but collection activity stops
3. The 10-year clock keeps running — Debt can eventually expire
4. Refunds will be seized — Adjust withholding to avoid overpayment
5. It's not permanent — IRS reviews periodically; improvement means resuming payments
6. Tax liens may still occur — Public record impact on credit is possible
7. You can request it directly — Call the IRS or respond to collection notices

Next Steps

Think you might qualify for CNC status?

1. Gather your financial documents (income, expenses, bank statements)
2. Call the IRS or respond to any collection notices you've received
3. Be prepared to discuss your complete financial picture
4. Take our quiz to see if CNC or another option fits your situation

Not sure if CNC is right for you?

Other options to consider: - Installment Agreements — If you can afford some monthly payment - Offer in Compromise — If you want to settle for less - Penalty Abatement — Reduce what you owe before choosing a path

Need help navigating your options?

📞 Call: (XXX) XXX-XXXX
Monday - Friday, 9AM - 5PM EST
Free consultation, no obligation.

We'll review your situation and tell you honestly which option makes the most sense — even if that means handling it yourself.

Sources

• IRS.gov: Temporarily Delay the Collection Process
• Internal Revenue Manual, Currently Not Collectible Procedures
• IRS Form 433-F Instructions
• IRS Publication 594: The IRS Collection Process
• National Taxpayer Advocate Reports

This guide is for educational purposes only and does not constitute tax advice. Every situation is different — consult a qualified tax professional for advice specific to your circumstances.