IRS Currently Not Collectible Status Complete Guide Checklist

Currently Not Collectible (CNC) is an IRS status that temporarily suspends collection activity when your basic living expenses exceed your income. The IRS assigns CNC when you cannot afford to pay taxes without experiencing financial hardship, and this status differs from payment plans because CNC removes active enforcement while you stabilize financially.

CNC is not automatic, and you must prove hardship exists through detailed financial documentation. Regular reviews occur using specific triggers, and CNC can terminate suddenly if your finances improve or if you fail to comply with filing requirements.

Collection actions like levies and wage garnishments stop during CNC status, but penalties and interest continue to accrue at the current rate of 7% per year for individuals, compounded daily.

An additional 0.5% per month failure-to-pay penalty applies unless you have an approved installment agreement.

Who Qualifies for CNC Status

This checklist applies to you if you owe federal income tax, self-employment tax, or other federal tax debt and your monthly living expenses exceed your current income. You may request CNC if you cannot afford a payment plan and want to stop IRS wage garnishments, bank levies, or property seizures.

CNC does not apply if

• Assets with equity exist that you could liquidate without causing hardship.
• A spouse or household member has substantial unreported income that remains

undisclosed.

• Your hardship is temporary and will resolve quickly without long-term intervention.
• You are already participating in an active Offer in Compromise or approved payment

plan.

Federal regulations prohibit granting CNC if you have income or equity in assets unless enforced collection would cause genuine economic hardship.

How the IRS Decides CNC Eligibility

One core question determines everything: Do your essential monthly expenses exceed your gross income? Evaluators focus on whether you are truly unable to pay, not whether you are unwilling.

Strict guidelines for housing, food, transportation, and medical costs apply based on Collection

Financial Standards, which include local standards for housing and utilities that vary by county and family size. Either your actual housing expense gets allowed if it is less than the local standard, or the local standard amount applies if your actual expense exceeds it.

Asset evaluation occurs during every CNC determination. Cases generally involve no income or assets, no equity in assets, or insufficient income to make any payment without causing hardship.

Required Documentation and Forms

Before contacting the IRS, gather

1. Twelve months of pay stubs or bank statements must be collected to document self-employed income.

2. Two years of tax returns plus recent business bank statements showing actual deposits are required for self-employed individuals only.

3. A complete household member list with all income sources, including spouse wages,

Social Security, disability benefits, unemployment, or child support, must be prepared.

4. Housing cost documentation with a lease or mortgage statement needs to be included.

5. Receipts or bank statements showing actual spending for utilities, food, transportation, insurance, child care, and medical costs should be organized.

Contact the IRS Automated Collection System (ACS) or your assigned Revenue Officer and clearly state you are requesting Currently Not Collectible status due to economic hardship. Form selection depends on your situation: use Form 433-F for streamlined cases, Form 433-A for wage earners and self-employed individuals, or Form 433-B if you operate a business entity.

Never use Form 433-A (OIC) or Form 433-B (OIC) for CNC requests, as these forms apply only to Offer in Compromise applications. Complete disclosure of all assets is mandatory, and forms require listing bank accounts, digital assets, vehicles, real property, retirement accounts, and business interests.

Maintaining CNC Status

Ongoing compliance keeps CNC protection active. File all new tax returns on time, even if you cannot pay the balance due, because failing to file fresh returns while in CNC results in automatic denial and resumption of collection. Protection exists only when you comply with filing obligations, and you must notify the IRS immediately if your financial situation improves through job rehire, inheritance, business recovery, or spouse income increase.

Review triggers vary by case type

• Hardship cases receive annual income reviews when you file tax returns.
• In-business corporations with balances of $50,000 or more face mandatory follow-up

within 18 to 24 months.

• Unable-to-locate or unable-to-contact cases reactivate when new address information or

levy sources are posted to IRS systems.

Request a written CNC status letter and keep it with your tax records. Without this documentation, different IRS departments may resume collection against you, claiming no CNC exists.

Critical Mistakes That Trigger Denial

Mailing CNC requests without financial documentation results in automatic denial because evaluators cannot assess hardship without proof. Concealing or downplaying a spouse's income or household income from adult children triggers immediate denial and potential criminal referral when discovered.

Running a profitable self-employed business while claiming hardship raises denial flags and IRS suspicion of dishonesty. At the same time, asset disclosure omissions or inflated expense numbers cause applications to lose credibility entirely.

Missing subsequent IRS interviews or information requests automatically terminate CNC status and resume wage garnishment or levies without further notice. Filing compliance failures during

CNC triggers immediate termination.

When Professional Representation Matters

Active wage garnishment or bank levies already in place require emergency intervention, and professionals can request immediate CNC hearings to stop collection while hardship evaluations proceed. Notice of Federal Tax Lien issuance creates complications that CNC does not resolve, requiring specialized guidance.

Multiple years of unfiled tax returns must be resolved before CNC requests can move forward, and self-employed individuals with complex business income often struggle to explain their finances clearly without representation.

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