The Currently Not Collectible (CNC) program is an IRS tax debt resolution plan in which the IRS awards taxpayers extended time to improve their financial situation, while ceasing all collection activity. There are various reasons for postponing collections, including the inability of a taxpayer to pay any amount of tax debt due to financial difficulties.
The advantage of Currently Not Collectible status is that a taxpayer is not required to pay anything on their tax debt, and is no longer at risk for IRS collection actions, including wage garnishments, or levies. CNC is temporary because the IRS regularly evaluates the status of the taxpayer to determine the possibility of recovering tax debt. The IRS can only collect a tax debt for 10 years. Once the Statute of Limitations expires, so does the tax debt.
If the tax debt is not paid in full, the IRS continues to charge interest and penalties on the amount, even in an IRS program, such as Currently Not Collectible. If a taxpayer has the ability to pay the full or partial amount of tax debt, with the added interest and penalties, the IRS will recover any amount of tax debt it can. It is only in cases where the IRS believes it has no hope of collecting any amount of tax debt that they accept a taxpayer into the Currently Not Collectible program.
Taxpayers should apply for the Currently Not Collectible program only if they cannot pay any amount of tax debt. Currently Not Collectible status is awarded by the IRS after a comprehensive review of the applicant’s financial strength is conducted, including sources of income, property and assets.
Every IRS debt payment plan, including Currently Not Collectible has strict qualifying restrictions and rules and regulations that need to be fulfilled in order to apply and stay compliant with the plan. Therefore, for the correct selection, admission, and continuation of an IRS debt payment plan, it is essential that taxpayers use the services of a legitimate tax resolution company or a tax professional.