Currently Not Collectible (CNC) status is granted to taxpayers who are unable to pay their tax debt due to financial hardship. When the IRS designates a taxpayer as CNC, it temporarily halts all collection actions, including levies, wage garnishments, and liens. This status allows taxpayers to focus on basic living expenses without the pressure of immediate IRS enforcement actions.
To qualify for CNC status, taxpayers must provide detailed financial information to the IRS, typically using Form 433-A or Form 433-F, which shows that paying the tax debt would cause undue hardship. While in CNC status, the tax debt remains active, and interest and penalties continue to accrue.
CNC status can be a temporary relief measure, but it does not eliminate the debt. The IRS may periodically review the taxpayer’s financial situation to determine whether collection actions should resume. CNC status provides taxpayers with a valuable option for avoiding aggressive collection actions while managing financial hardship.