What the term means
Currently Not Collectible means the IRS has temporarily suspended most active collection because the taxpayer cannot currently pay without being unable to meet necessary living expenses. It is commonly called CNC or hardship status.
What CNC does not mean
- It does not forgive or cancel the tax debt.
- It does not stop applicable penalties or interest.
- It does not guarantee that a federal tax refund will be issued to the taxpayer.
- It does not prevent every Notice of Federal Tax Lien filing.
- It is not a permanent promise that collection will never resume.
How the IRS evaluates it
The IRS may request current information about income, necessary living expenses, assets, loans, and other financial resources. Collection Information Statements include Form 433-F, Form 433-A for wage earners and self-employed individuals, and Form 433-B for businesses. The form used depends on the account and the employee’s instructions.
CNC compared with other collection alternatives
- Installment agreement: the taxpayer makes scheduled payments.
- Offer in compromise: the taxpayer asks to settle an eligible debt for less than the full amount.
- Penalty relief: the taxpayer asks to remove a qualifying penalty; it does not resolve the underlying tax.
- CNC: the IRS temporarily delays most collection because no payment is currently affordable.
What happens while the account is CNC
The IRS can apply refunds to the balance, file a federal tax lien notice, send annual balance notices, and review the financial condition later. If the ability to pay improves, collection may resume. Taxpayers should continue filing returns and meeting current tax obligations.
Example
A taxpayer loses work, has essential housing and medical expenses, and has no monthly amount available after necessary expenses. After reviewing a current Form 433 and supporting records, the IRS places the listed tax periods in CNC status. The IRS stops most active collection for now, but interest continues and a future refund can be applied to the balance.