An Introduction to the IRS’ “Currently-Not-Collectible” Tax Program

Tax time is certainly looked at as one of people’s least favorite times of the year. While it’s a headache for some, it can be truly stressful and upsetting for others. Imagine living paycheck to paycheck, barely able to make ends meet, and then finding out you owe the IRS thousands of dollars. A situation like this might seem hopeless, but there is a light at the end of the tunnel. The IRS has created a program for those experiencing extreme hardship called “Currently-Not-Collectible” or CNC, which might be applied to your account if you meet certain criteria. 

Applying for CNC Status

In order to be placed in this program, you must submit an application to the IRS. They might ask you to file any delinquent returns and then will request income and expense information from you to determine your level of need. If it’s found that you cannot maintain your basic living expenses while making payment toward your tax debt, your account will be labeled as CNC.

What Happens in the Program

The CNC program doesn’t wipe your debt clean; rather, it places it on hold for as long as you continue to experience financial hardship. In fact, the IRS can review your financial information yearly and can attempt to collect your past due amount for up to 10 years (or more in certain situations).

Although you are exempt from paying down your balance while your account is “Currently-Not-Collectible,” you will still incur penalties and interest on your debt. The main benefit to this program is that the IRS is prevented from pursuing any collection actions, like garnishing your wages or freezing your assets.

While this program helps immensely, a hardship status does stop the IRS from filing a Notice of Federal Tax Lien, which affects your ability to sell assets or property. This lien can also have an adverse affect on your credit score, so it’s in your best interest to pay your balance due as soon as you are able to.

What If You Still Can’t Pay?

The CNC program can sound too good to be true for some individuals, so keep in mind that eventually you will be responsible for your tax debt. However, if you are having difficulty paying your living expenses, and the thought of paying your past-due tax liabilities seems impossible, it may be worthwhile to contact the IRS or a tax attorney to discuss your options.

If you’re having concerns about your debt with the IRS, contact The Law Office of Robert V. Boeshaar today. We help individuals and small businesses resolve their disputes with the IRS.

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