Currently Not Collectible Status:
Pause IRS Collection During Financial Hardship

What Is Currently Not Collectible Status?

Currently Not Collectible (CNC) is an administrative status the IRS assigns to a taxpayer account when the IRS determines that the taxpayer has no ability to pay their tax liability without being unable to meet basic living expenses. While an account is in CNC status, the IRS suspends all active collection activity — no levies, no wage garnishments, no bank seizures, no new enforcement action.

CNC is not a settlement or a forgiveness of debt. The liability remains, interest and penalties continue to accrue, and the IRS will resume collection when it believes your financial situation has improved. But for taxpayers in genuine financial crisis, CNC can provide critical breathing room — time to stabilize finances, evaluate longer-term resolution options, and avoid the immediate trauma of IRS collection action.

How the IRS Evaluates CNC Eligibility

The IRS determines CNC eligibility by comparing your monthly income against your allowable monthly living expenses using its National Standards and Local Standards (the same expense tables used in the Offer in Compromise calculation). If your income does not exceed your allowable expenses by a meaningful amount — leaving little or nothing available for IRS payments — the account may qualify for CNC.

You must provide financial documentation, typically on Form 433-A (for individuals) or Form 433-F. This includes:

• All sources of income (wages, self-employment, Social Security, rental income)
• All living expenses (housing, utilities, food, transportation, medical)
• All assets (bank accounts, real estate, vehicles, retirement accounts, investments)
• All debts and liabilities

What Happens While Your Account Is in CNC Status

• Collection activity stops: The IRS will not levy bank accounts, wages, or other assets while the account remains in CNC
• Interest and penalties continue: The balance grows — CNC does not stop the accrual of interest (currently 8% annually) or the failure-to-pay penalty
• Tax liens may remain: A Notice of Federal Tax Lien already filed is not released just because an account enters CNC status
• Annual review: The IRS matches CNC accounts against income tax returns and third-party data annually. If your income increases materially, the IRS may close CNC status and restart collection
• Collection statute continues to run: The 10-year collection statute of limitations (CSED) continues during CNC — meaning the clock ticks toward the date when the liability expires

CNC vs. Other Resolution Options

Using CNC Strategically

CNC is sometimes used strategically as part of a longer-term plan — not just as an emergency measure. If a taxpayer has a large liability but limited current assets, and the Collection Statute Expiration Date is approaching, CNC status can allow the statute to run while collection is suspended. When the CSED expires, the liability is extinguished. This strategy requires careful analysis of all relevant CSEDs, any tolling events, and the taxpayer's financial trajectory.

CNC can also be a bridge strategy — protecting the taxpayer while they gather documentation for an Offer in Compromise, wait for a change in financial circumstances, or work through bankruptcy proceedings.