A taxpayer designated as “Currently Not Collectible” (CNC) is one whose ability to pay their delinquent taxes has been determined by the government. The IRS collection process is momentarily halted when an account is labelled as “Currently Not Collectible.”
What is meant by “Currently Not Collectible”?
A person cannot attain the status of Currently Not Collectible because of “limited time available.” Once the IRS temporarily halts any ongoing collections against a delinquent taxpayer, the taxpayer may be placed in the position of “Currently Non Collectible” with the IRS.
Until your present financial condition improves, “Currently Non Collectible” will cease collection enforcement, threatening letters, and levies. If the taxpayer can show that collections have caused them to experience financial hardship and that they are unable to pay their overdue taxes, the IRS will take this action. The IRS often will not give a taxpayer this status until they have complied. Taxpayers can always look for tax settlement services near me to look into their scope for CNC status to get some relief for the time being.
For whom is Non-Collectible status applicable?
The Internal Revenue Manual’s Part 5, Chapter 16, Section 1 provides the meaning and requirements for the IRS designation “Currently Not Collectible.” According to this, a taxpayer must show a financial difficulty that, after covering living expenses, leaves little to no money left over to pay down unpaid taxes to be eligible for IRS CNC. The taxpayer needs to prove that there is a real financial hardship, not just a small annoyance.
What takes place with IRS CNC?
A tax levy will be stopped, and all collection and enforcement actions will be temporarily halted when a taxpayer is placed under IRS Currently Not Collectible status. They are obligated to effectively leave you alone, apart from an annual bill notice, and can no longer pursue ongoing collection attempts after they accept that you are unable to pay off your balance owing to financial hardship and place your account into CNC.
For how long is an account Non-Collectible?
The currently Not Collectible classification is meant to provide only short-term respite. Depending on the circumstances, an account’s CNC status protection lasts for a different length of time. The IRS officer will enter a closure code and eventually remove your case for re-examination if they find the account is not collectible.