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Tax Relief Guide

Currently Not Collectible (CNC)

A plain-English guide to what CNC means, who qualifies, how the IRS decides, and what happens while you're in CNC status.

  • What it means: IRS temporarily delays collection due to financial hardship
  • Requirements: Cannot pay basic living expenses and tax debt
  • Important: Interest and penalties continue to accrue
  • Duration: Until financial situation improves or collection statute expires
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What is Currently Not Collectible

Currently Not Collectible, or CNC, is an IRS status that pauses active collection because your verified income and necessary living expenses leave no money available to pay the tax. Interest and penalties continue to accrue, and federal tax liens may remain, but levies and garnishments generally stop while you are in CNC.

CNC is not a settlement and does not wipe out the balance. It is a protection status that lasts while your hardship persists or until the IRS reviews your case and finds you can afford payments.

Who qualifies

  • All required tax returns filed and current-year payments up to date, if applicable.
  • Verified income and expenses show zero or negative monthly ability to pay.
  • No substantial equity that can be liquidated without creating hardship.

The IRS considers household resources. If a spouse or partner shares expenses, that support can factor into the decision. Provide clear evidence of how costs are split.

How to request CNC

  1. Gather the last 6–12 months of bank statements, pay stubs, bills, and any support orders.
  2. Prepare a financial statement: Form 433-F or 433-A (individuals) or 433-B (businesses).
  3. Document any expenses above IRS standards with leases, medical letters, invoices, or receipts.
  4. Submit the package to the IRS and respond to any requests for clarification.

What happens while in CNC

  • Levy action usually stops after your case is marked CNC.
  • Liens can remain in place until the balance is resolved or the statute expires.
  • Interest and failure-to-pay penalties continue to accrue.
  • You must file and pay on time going forward; new balances can end CNC.

IRS reviews and when CNC can end

The IRS may review your finances periodically. If income rises or expenses drop, the IRS can move you to an installment agreement or request a new financial statement. If your hardship continues, CNC can be extended. If the collection statute expires while you are in CNC, any remaining balance is no longer collectible.

CNC vs Offer in Compromise vs Installment Agreement

When CNC is best

Use CNC when you have no current ability to pay and expect the hardship to last for a while. It protects you while you stabilize income and expenses.

When an Installment Agreement is better

If you can afford a reasonable monthly payment without missing current taxes, a payment plan can stop additional penalties faster and keep you in compliance.

When an OIC is better

If your asset equity and projected income are low enough that a settlement near realistic collection potential is possible, an OIC may permanently resolve the balance.

FAQ

Will the IRS file a lien while I am in CNC

Yes, the IRS may file or keep a federal tax lien in place while you are in CNC. The lien secures the debt until the balance is resolved or the statute expires.

How long does CNC last

There is no fixed length. CNC continues while your verified finances show no ability to pay, or until the IRS review finds you can make payments, or the statute runs out.

Can I work or earn more money while in CNC

Yes. If income rises, the IRS may request a new financial statement and propose a payment plan based on the updated numbers.