What is Uncollectible Status?

...and How to Obtain it
17 August 2020

What is Uncollectible Status, and How to Obtain it.

If the IRS determines that you do not have the ability to pay you tax debt, they can place your account in “Currently Not Collectible” status.

The CNC status can be applied to both individual and business accounts.

What does CNC status mean? 

When you tax debt is placed in CNC status, it means that the IRS will not aggressively come after your money.  The IRS will not Levy your bank account. The IRS will not seize your assets. The IRS will not garnish your wages.

But the IRS will continue to passively collect from you.  The IRS will file a tax lien in your county. The IRS will take any refunds you would be entitled to in future years.

Additionally, the IRS will review your account every year to determine if your financial situation has changed and you can now afford to pay your taxes.  If a recently filed income tax return show an increase in income the IRS may remove your CNC status and resume collection activity.

How to Request CNC Status?

To get your account placed in CNC status you, or your tax representative, need to contact the IRS.  The point of this contact is to describe your situation, explaining your hardship.  Depending on the facts of your situation, the IRS will tell you what is needed to prove your inability to pay.

The most common way to provide your financial details to the IRS is by using Form 433 and supporting documents.

Usually the IRS will request this form to be fax directly to the phone agent during the call.  The agent will review the information and provide an immediate preliminary decision.

Jeff Roltgen, Tax Rescue CPA

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