Currently Not Collectible (CNC) status is reserved for individuals who lack the ability to pay any portion of the taxes they owe. This goes beyond merely not having sufficient income. You cannot have any resources at all to use. This means you cannot have any credit cards, no ability to receive a loan from a bank, nor any friends from whom you can borrow.
Obtaining CNC status is difficult, but it should always be considered if you are unemployed or your income barely meets your living expenses. In order to receive CNC status, you will need to show the IRS that you do not have the assets to pay the taxes owed. To establish the lack of ability to pay, the IRS will want to see a financial statement detailing all assets and expenses (IRS Form 433-F). While penalties and interest will continue to accrue, the IRS will cease all collection efforts until you get to a financial situation where you can begin to make payments. During the CNC period, you will still need to file your taxes and keep them current.
If granted CNC status, the statute of limitations still runs during this period for taxes owed. The statute of limitation for taxes owed the IRS is 10 years. If the 10 year period runs out and the taxes are not collected, the taxes are wiped out. As a result, many people have remained in a CNC status for years and as a result of the statute of limitations expiring, have ended up not owing anything for the taxes during that period.
If you have any questions about Currently Not Collectible or any tax resolution options, please feel free to contact us and one of our experienced tax specialists will contact you shortly. Simply fill out the form to the right or click on the button below and someone from our A+ BBB rated staff will contact you soon.
Levy & Associates is available for free initial consultations. We’re happy to answer any questions you have about the audit process or address any concerns about your specific situation.
There’s never a good time to be audited, and the time-consuming process will take away from your business or family if you try to face it alone. Let us handle and coordinate communication, so you can return to your daily life.