What Is the Currently Not Collectible (CNC) Tax Program?

What Is the Currently Not Collectible (CNC) Tax Program?

If you are considering asking the IRS for currently not collectible (CNC) status because you cannot both pay any of your tax bill and at the same time meet your basic living expenses, the experienced tax attorneys at Wiggam & Geer can help you evaluate all options and negotiate for you with the IRS.

Sometimes taxpayers find themselves in temporary dire straits where choosing to pay a portion of their tax bill would result in not being able to meet one or more of their basic living expenses. In these cases, taxpayers can opt to report their tax obligation as currently not collectible (CNC) to the IRS and temporarily suspend collection efforts.

What Is CNC status?

CNC status means the IRS has determined that you cannot meet your tax obligation at this time, while also taking care of your basic living expenses. CNC is not a permanent forgiveness of all or part of your tax debt. Instead, CNC is a temporary delay of collection efforts by the IRS until your financial position improves.

While the IRS may delay collection efforts, it likely will not forgo filing liens against your assets while your account is CNC. A tax lien is a claim to your property and signifies to other creditors that the IRS has legal rights to your assets. If you sell an asset with a tax lien, the IRS gets paid first before you or other creditors receive any proceeds.

It’s also important to note that the IRS does not suspend interest or penalties. In fact, both continue to accrue while you are in CNC status, thus adding to your overall tax bill.

How Do I Apply for CNC?

Unlike applying for an installment agreement or offer in compromise, there is no official form or application for CNC status. Instead, you can request CNC status by calling the telephone number on your most recent IRS notice or call the agency at its main number 800-829-1040.

Before placing your account in CNC status, the IRS will likely ask you to complete Form 433-F, Collection Information Statement to prove your financial status. This form requests information about your assets, income, and expenses.

The IRS will look at your bank accounts, investments, real estate, and other assets including cars and life insurance policies. If you are employed, the agency will request employer and wage details. If you are self-employed, it will ask about your business accounts receivables as well as information on business credit cards. The IRS will also evaluate your monthly living expenses – rent or mortgage payments, food and personal care, utilities, transportation, taxes, medical, and other expenses. The agency will request backup and supporting documentation for assets, income, and expenses.

Note, the IRS may not share your opinion on what qualifies as a vital monthly living expense and may ask you to dispose of assets to pay your bill. While it usually doesn’t ask you to sell your only home or car, it might not see your second home as vital and may ask you to sell or borrow against it.

How Long Does CNC Status Last?

CNC status usually lasts somewhere between six months and two years. The IRS will review the taxpayer’s financial status through tax returns submitted while on CNC status. If the taxpayer’s status improves, the IRS may revoke the CNC status.

If you have no hope of paying any portion of your tax bill while also meeting your living expenses, an experienced tax attorney can help you review your options, including currently not collectible status. At Wiggam & Geer, our team of experienced tax lawyers can help you evaluate all your choices and represent you. Give us a call today at (404) 609-1300 to get started.

 

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