IRS Currently Not Collectible Status: Pause IRS Collection

Do you need the IRS to leave you alone for a while? We can make that request for you. CNC (Currently Not Collectible) is a taxpayer status issued to people who are unable to repay tax liabilities to the government. After an account becomes designated as CNC, it puts the process of collection by the IRS on hold. As such, levies stop, and the IRS generally stops pursuing you with collection calls and letters. If you require relief from back taxes, obtained an Intent to Levy notice, or are in the process of having your wages garnished, it is worth your while to keep reading!

According to the IRS (as per Part 5, Chapter 16, Section 1 of their Internal Revenue Manual), a taxpayer may be eligible for Currently Not Collectible status if they can prove financial difficulty. Specifically, applicants must establish that there is very little money to live off of once tax debts are subtracted. Such taxpayers must explain why they are at an extreme economic disadvantage, as opposed to a simple setback.

In order to determine eligibility, an officer of the IRS will review your income, living expenses and assets. The IRS also records your TPI (Total Positive Income), which it uses later to decide whether to reopen your case. This refers to positive values displayed in a tax return’s income portion, which includes:

• Earnings
• Dividends
• Interest
• Schedule F revenue (commercial farming ventures).
• Schedule C revenue (profits from self-employment earnings).
• Property income.
• Other investment or income sources.

Your income will be tallied up by the IRS and contrasted against both local and national standard living costs, which are categorized into 4 groups. The standards established by the IRS let you subtract the following from your income. These are the amounts in effect since June 29, 2026:

• National standards: refers to various monthly living costs (including food, household items, services and apparel, personal services and products, and miscellaneous costs). The IRS allows national standard deductions of $867 for individuals and as much as $2,176 for a family of four, plus $397 for each additional person.
• National standards: healthcare expenses paid out of pocket. Deductions can be made for prescription medications, medical services, and essential living supplies like eyeglasses (as much as $163 for people 65 years old and over; $90 for people under the age of 65).
• Local standards: utility and housing expenses. These standards include costs for rent/mortgages, garbage collection, heating, gas, property taxes, etc. The deductible expenses differ per county (as per data obtained from the American Community Survey, BLS, and the US Census Bureau). The IRS publishes the amount for each county.
• Local standards: expenses for transportation. Deductions for lease payments or monthly loans (a.k.a. ownership costs) are quantified using nationwide figures. Other monthly operation expenses are quantified by the Metropolitan Statistical Area and Census Region. $220 can be deducted for public transportation; $703 can be deducted for ownership expenses on a single vehicle, while $1,406 can be deducted for two vehicles. Standard operating expenses differ per region.

The food, clothing and health care amounts are allowed in full without receipts. For housing and transportation, the IRS allows the lower of what you actually pay or the standard. Other necessary expenses, such as court-ordered child support, current tax payments and health insurance, can be added when they’re documented.

Your standard costs will be combined by the IRS before being subtracted from your income. This will establish your NDI (Net Disposable Income). In theory, this amount can be used for tax payments. The IRS may deem your account CNC if tax repayments would leave you in a difficult economic position (after subtraction of your standard living costs are made).

Any tax levies imposed by the IRS will be stopped once a taxpayer is granted CNC status. Collection activity and enforcement of it will be temporarily put on hold. After the IRS decides that you are unable to repay amounts owing because of financial challenges, it generally leaves you be. You will still receive a bill in the mail every year, though, but the IRS won’t aggressively try to collect debts from you during this period. Essentially, you’ll be free (for a while) from:

• Wage garnishments.
• Bank levies and other levies.
• Repeated collection attempts.
• Continuous letters and calls.
• Required monthly payments.

Be mindful, though, that after your account is classified as CNC, your debt won’t be eliminated; you are still obligated to repay your debt and are expected to do so. Rather, the IRS gives you a bit of a breather so you can make ends meet. Even though the IRS may grant you CNC, your financial circumstances will be re-evaluated at a later date to determine if you have the ability to repay outstanding liabilities. The IRS may also file a Notice of Federal Tax Lien to protect its interest, usually when the balance is $10,000 or more.

After the taxpayer receives Currently Not Collectible status, their income tax returns will be monitored by the IRS every year to determine if there has been an increase in earnings. The taxpayer can lose their CNC status if income rises above the level the IRS set when it closed the case. Taxpayers may be asked to submit revised financial statements to establish if payments can be made.

It is also worth noting that penalties and interest keep accruing on whatever you owe the IRS. You are saving some money in the short term, but inevitably, your debts will catch up to you, unless the collection period runs out first.

You’re still obligated to have income taxes filed when you have CNC status. All tax refunds you are entitled to will be applied to outstanding debts as long as a balance exists. As such, it is worthwhile to speak with a tax expert to find out what your options are, as far as relief from back taxes go. For example, based on what your circumstances are, an offer in compromise with the IRS could be to your benefit.

CNC is not a permanent answer; rather, it is short-term relief. The duration that an account remains protected under Currently Not Collectible status differs per case. After an IRS officer deems an account as CNC, they will give it a closing code (indicating that your case will be reopened for review at a later date). The code used (and when your case will be re-opened) is contingent on your financial situation and allowable living expenses.

1. Financial statementForm 433-F or 433-A with your income, expenses and assets.
2. IRS reviewYour income is compared with the IRS’s living expense standards.
3. CNC grantedCollection pauses and the IRS sets an income level for review.
4. Yearly checkEach return you file is checked against that level.
5. OutcomeCollection resumes, or the 10-year collection period runs out.

For the most part, the government has a decade to try and collect taxes owing from you. After 10 years, enforcement of the statute of limitations sets in. CNC status doesn’t pause that clock, so it keeps running while your account is in CNC. The statute of limitations begins on the date the tax is assessed and lasts for 10 years. If taxes are not repaid within ten years, the IRS loses the opportunity to try and collect them. Note: there are certain exceptions made, such as time spent in bankruptcy, while an offer in compromise is pending, or during a Collection Due Process appeal, which pauses the clock.

To qualify for CNC status, a comprehensive financial report goes to the IRS. This report will establish your case’s fate. Before we apply, we make sure all your required tax returns are filed. Even if you’re not able to repay anything at the moment, having all of your taxes filed will keep you in the IRS’ good graces.

The documentation required for Currently Not Collectible status applications should indicate:

• Your living expenses and income.
• What your assets are and the market values for them.

We include the following with your application:

• The last 3 months’ worth of bank statements.
• Receipts for medical expenses paid out of pocket.
• Recent pay stubs or other proof of income.
• Proof of rent or mortgage, utility, vehicle and insurance payments.

This documentation will be helpful in completing Form 433 (usually Form 433-F or 433-A), which is an IRS-mandated financial statement. This form gives the government a blueprint of your finances, which it will use to decide if you qualify for CNC status.

Here’s how we prepare the documentation:

• We list all your assets that are both intangible and tangible (such as stocks, automobiles, property, etc.).
• We figure out what the market value is for your assets.
• We total the income you earned within the last 90 days.
• We total how much money you spent within the last 90 days.
• We average your 90-day income, then contrast it against your expenses (which are categorized the way the IRS standards are).

Applying for CNC status may sound like an overwhelming endeavor to you. Getting help from a professional optimizes your odds of being granted CNC status. Our experienced team of tax specialists can make a case to the IRS for you. By doing so, you’ll get the most realistic solution possible. Let our seasoned experts collaborate with both you and the IRS through the entire process. Get in touch with us now to learn how your case can be resolved. We’ll tell you plainly whether CNC fits or whether another option works better.

1. We review your account

   We file a power of attorney, pull your IRS transcripts, and check the balance, any levies, and how much time is left on the 10-year clock.

2. We get your filing current

   We prepare any missing returns, since the IRS won’t grant CNC while required returns are unfiled.

3. We build the financial statement

   We prepare Form 433-F or 433-A with your documents, using every expense the IRS standards allow.

4. We request the status and follow up

   We present the case to the IRS, ask for any levy to be released, and check whether an offer would serve you better.

You can also see how the IRS Fresh Start program works.