Currently Not Collectible (CNC) is an IRS account designation under IRM 5.16 that indicates the IRS has determined a taxpayer cannot pay their tax liability without experiencing economic hardship. When your account is placed in CNC status, the IRS suspends all active collection efforts, including:
The IRS defines economic hardship as an inability to pay reasonable basic living expenses — including housing, food, transportation, medical care, and other necessities — based on the IRS’s own Collection Financial Standards (also called Allowable Living Expenses, or ALEs). These standards set specific dollar amounts for each expense category based on your household size, income level, and geographic location.
Important: CNC status does not eliminate your tax liability. The balance remains on your account, and interest and the failure-to-pay penalty (at the normal 0.5% per month, up to 25%) continue to accrue. However, the critical advantage is that the Collection Statute Expiration Date (CSED) continues to run while you’re in CNC status. Under IRC §6502, the IRS has 10 years from the date of assessment to collect a tax liability. Once the CSED passes, the balance is legally uncollectible and is removed from your account.
For many taxpayers, CNC status allows some or all of their tax liability to expire — effectively resulting in a resolution without payment.
You may qualify for CNC status if:
When you contact Global Gate Tax Relief at 1-877-800-8180, we start with a thorough review of your tax account and financial situation. We pull your IRS transcripts to understand the full scope of your tax liability, including all tax years, penalties, and interest. We then analyze your income, expenses, and assets against the IRS Collection Financial Standards to determine if CNC is the right strategy.
To request CNC status, the IRS requires a complete picture of your finances. We help you compile the necessary documentation, including:
The IRS requires taxpayers to complete a financial disclosure form — either Form 433-F (Collection Information Statement) for simpler cases handled by the Automated Collection System (ACS), or Form 433-A (Collection Information Statement for Wage Earners and Self-Employed Individuals) for cases involving a Revenue Officer. These forms are detailed financial statements that document your:
We prepare these forms strategically, ensuring every allowable expense is properly documented and that your financial picture accurately reflects your inability to pay. The IRS allows expenses for housing and utilities, food and clothing, transportation (ownership costs and operating costs), health care, court-ordered payments, child/dependent care, and other necessary expenses — each with specific caps based on the IRS’s published national and local standards.
Depending on how your case is being handled, we submit your CNC request through the appropriate channel:
Once the IRS approves CNC status, your account is coded with a closing code that reflects the reason for the designation (e.g., hardship, unable to locate, etc.) and collection activity stops. The IRS will typically assign a specific income threshold — if your income rises above this level in future years (detected through your filed tax returns), the IRS may review your CNC status. We advise you on what to expect during CNC status, including:
All IRS collection activity stops: no levies, no garnishments, no seizures, no Revenue Officer visits
The 10-year collection clock keeps ticking, meaning some or all of your balance may expire while in CNC status
Unlike an installment agreement, CNC status requires no monthly payments to the IRS
CNC prevents the IRS from collecting in ways that would leave you unable to meet basic living expenses
While the IRS may file a tax lien during CNC (for liabilities over $10,000), it will not take active enforcement steps like levies or seizures
CNC status can be a stepping stone to an Offer in Compromise or may simply allow liabilities to expire through CSED
The failure-to-pay penalty keeps accruing at 0.5% per month (up to 25%) while in CNC status; the 0.25% rate applies only during an approved payment plan
CNC applies to income tax, self-employment tax, payroll tax liabilities, and other federal tax liabilities
Robert, a 58-year-old disabled veteran in Denver, owed the IRS $47,000 for tax years 2017 through 2020. His only income was $2,400 per month in VA disability benefits and $800 per month from a part-time consulting arrangement. After receiving an LT11 notice threatening to levy his bank account, Robert contacted Global Gate Tax Relief in a panic.
Our team immediately filed Form 2848 (Power of Attorney) and contacted the ACS unit handling Robert’s case to prevent the levy. We then completed Form 433-F, documenting Robert’s monthly income of $3,200 against allowable expenses of $3,350 (including housing, food, medical costs, and transportation). With expenses exceeding income, Robert clearly qualified for CNC status.
The IRS approved CNC status within three weeks. We then analyzed Robert’s CSED dates: the 2017 liability ($12,000) had a CSED of March 2028, meaning it would expire in about four years. The remaining liabilities had CSEDs extending to 2030-2031. With CNC in place, Robert’s $47,000 liability would be completely uncollectible by 2031 — without paying a dime. We also secured penalty abatement on the 2020 tax year, reducing his total balance by $3,200.
Robert filed his returns on time each year, maintained his CNC status, and as of now, over $12,000 of his liability has already expired through CSED.
Our professionals understand IRS Collection Financial Standards inside and out and know how to present your finances for the strongest possible CNC case.
Call 1-877-800-8180 to discuss your situation and learn whether CNC status is right for you, at no cost.
If you’re facing an imminent bank levy or wage garnishment, we act quickly to stop enforcement and pursue CNC status.
CNC may be one piece of a larger strategy. We evaluate whether CNC combined with CSED expiration, Offer in Compromise, or penalty abatement provides the optimal outcome.
We calculate and monitor your Collection Statute Expiration Dates so you know exactly when your tax liabilities are scheduled to be eliminated.
We advise you through annual IRS reviews and help you maintain CNC status as long as you qualify.
No, CNC status does not eliminate your tax liability. The balance remains on your account, and interest and the failure-to-pay penalty continue to accrue at their normal rates. However, the Collection Statute Expiration Date (CSED) continues to run during CNC status. Under IRC §6502, the IRS has 10 years from the date of assessment to collect. Once the CSED passes, the balance is legally uncollectible and removed from your account. For many clients, CNC effectively results in liability elimination through expiration.
Possibly. IRS policy generally requires filing a Notice of Federal Tax Lien when the assessed balance exceeds $10,000, even for CNC accounts. A tax lien protects the government’s interest in your assets but is different from a levy — the lien attaches to your property but doesn’t seize it. The lien can affect your ability to get credit and your ability to sell property or obtain financing, but active collection (levies, garnishments, seizures) is prohibited during CNC status.
CNC status remains in effect until one of three things happens: (1) the IRS reviews your account and determines your financial situation has improved enough to resume collection, (2) your Collection Statute Expiration Date passes and the balance expires, or (3) you fail to file required returns or otherwise violate CNC conditions. The IRS typically reviews CNC accounts annually by comparing your filed return against the income threshold set when CNC was granted.
Collection Financial Standards — also called Allowable Living Expenses (ALEs) — are IRS-published guidelines that determine what expenses the IRS considers necessary for a taxpayer’s health, welfare, and production of income. They include national standards (food, clothing, personal care, miscellaneous) and local standards (housing/utilities, transportation) that vary by geographic area and household size. If your allowable expenses equal or exceed your income, you generally qualify for CNC status.
Yes, though it depends on the type and value of assets. The IRS primarily focuses on your monthly cash flow (income vs. expenses) when evaluating CNC eligibility. While significant liquid assets (large bank balances, investment accounts) may disqualify you, equity in your primary residence, retirement accounts, and necessary personal property generally does not prevent CNC approval. We help you understand how the IRS views your specific asset situation.
The IRS monitors CNC accounts through your annual tax return filings. If your income increases above the threshold the IRS set when granting CNC, the agency may contact you to review your financial situation. This could result in CNC status being continued (if your expenses have also increased), transition to an installment agreement, or resumption of collection activity. We help you navigate these reviews and maintain the most favorable status possible.
Yes. In fact, CNC status can actually strengthen an Offer in Compromise application because it demonstrates that the IRS has already determined you cannot pay your full liability. If your remaining CSED period is short and your ability to pay is limited, an OIC based on your reduced reasonable collection potential may result in settling your balance for pennies on the dollar.
Absolutely. Maintaining CNC status requires you to remain in filing compliance — meaning all required returns must be filed on time. If you fail to file a return while in CNC status, the IRS can revoke the designation and resume collection activity. Additionally, if a newly filed return shows a refund, the IRS will typically offset (seize) the refund against your existing balance. We help clients ensure ongoing compliance to protect their CNC status.
If the IRS is demanding payment you simply cannot afford, Currently Not Collectible status may be the relief you need. Global Gate Tax Relief will evaluate your finances, prepare your CNC application, and negotiate with the IRS to stop collection activity — giving you the breathing room to get back on your feet while the collection clock continues to wind down.
