Q: Am I eligible for a currently not collectible (CNC) status?

A: Currently not collectible (CNC) status is intended for people who have literally no ability to pay their tax debt. If you owe money to the IRS and you can't afford to pay even a portion, applying for CNC status is probably your best bet. However, it's important to know that the IRS isn't just going to take your word for it about your situation. You'll be expected to prove that you honestly can't pay, and the final decision is left to the IRS, so if they determine that you can pay, you'll be expected to come up with the money or else face fees and penalties while your debt mounts.

It sounds scary, but if you honestly can't spare any money for the IRS, it's worth it to apply for CNC status. It can give you serious peace of mind, since when you're declared CNC, the IRS must stop all collection activities. That not only means no more threatening letters and calls, but also no more levies or garnishments. The only contact you'll have with the IRS is an annual statement declaring how much you owe, but it's not a bill. Your status will be reviewed annually, so if you get back on your feet, you will be required to begin paying on your tax debt. However, if you remain unable to pay for ten consecutive years, your tax debt will disappear.

If you think you may be eligible for CNC status, contact a tax professional to help you fill out the IRS form 433-F. This will begin the application process.

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