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What is Currently Not-Collectible?

Sep 16, 2022

When it comes to finding suitable tax debt solutions to fit your needs, one of the options that could be available to both individual and business taxpayers is a Currently Not-Collectible Petition. Let’s take a closer look at what this means and whether or not it may be suitable for a place on your shortlist of viable tax debt solutions.

What Does Currently Not-Collectible Mean?

If the IRS has determined that you are unable to make payments towards your tax debt, you may be designated as a Currently Not-Collectible, or CNC, status. This does not write off your tax debts, but you will be able to defer making any payments towards your debt. The IRS grants this designation to allow you or your business time to get your finances in order with the hope that you can position yourself to eventually make payments towards the debt.

While you are in Currently Not-Collectible status, the IRS will not actively pursue recovery of your owed taxes. This means the IRS will not garnish your wages, levy your bank account(s), or require you to set up an Installment Agreement. However, if your tax debt exceeds $10,000, they may file a Notice of Federal Tax Lien. This will be flagged on a business’ credit report and becomes public record for both businesses and individuals, so you may want to take note of that when considering filing a Currently Not-Collectible Petition. If you are entitled to a tax refund for future tax periods, the IRS will seize these refunds until the tax balance is paid off or the collection statute expires. This process is referred to as a ‘refund offset.’

Am I a Candidate for a Currently Not-Collectible Petition?

If you are thinking that making a Currently Not-Collectible petition could be an option for you, then discussing your situation with an experienced tax debt professional like those at Golden Lion Tax Solutions is best. Not every resolution will be suitable for every taxpayer, so getting expert advice on the best tax debt solutions for your specific needs and short and long-term goals will be greatly beneficial.

To be considered for CNC status, there must be evidence that repaying you or your business’ tax debt at this time would result in significant financial hardship. The IRS deems significant hardship as being unable to pay for personal daily living expenses or a business’ necessary expenditures if a monthly payment towards the debt is demanded. To help reach this conclusion, there are several requirements that the IRS looks at, and candidates should meet at least one of them to be considered for CNC status:

For Personal accounts:

  • Your living expenses are within IRS guidelines
  • You have little or no money left after basic living expenses
  • Your income is solely from Social Security, Welfare, or Unemployment benefits
  • The 10-year statute of limitations for collecting your tax debt only has a few years remaining
  • You are unemployed and do not have any additional sources of income

For business accounts:

  • Your business has minimal profits realized over a six-month timeframe
  • Your business is able to maintain ongoing tax obligations in full, but has no additional funds available to apply to the tax debt
  • The responsible parties for the business are taking minimal funds from the business in an effort to allow the business to continue operating

Important conditions of CNC to keep in mind

When the IRS places a personal or business tax account into a Currently Not-Collectible status, they may stop making collection efforts, but that does not mean that the debt freezes. If any penalties are still able to be applied to the debt (failure to pay, etc.), those penalties will continue to be added to the total debt owed. Additionally, interest will continue to accrue at the quarterly-determined rate set by Congress. As of September 2022, the interest rate being charged on all balances owed is 6% compounded daily. So while you are not addressing the debt, the total balance will continue to rise. This may or may not fit with your long-term goals for you or your business.

The best way to make a true assessment of Currently Not-Collectible status, or any other resolution option, is to speak with a professional. The team at Golden Lion Tax Solutions is able to make a full assessment of your situation and your goals to determine which resolution options will best suit your interests. Golden Lion Tax Solutions is your guide through the stormy waters of tax debt complications.


Trust. Protection. Wisdom.

Your future and your family deserve the right protection. Golden Lion Tax Solutions will be your advisor and confidant throughout the entire journey. We guarantee to offer you or your business best-case solutions for your tax debt. We are by your side every step of the way. Start now and get your life back.

For help with your tax debts, email contactus@goldenliontaxsolutions.com or call 833-LION-TAX (833-546-6829)

Disclaimer: There are requirements that must be satisfied in order to qualify for some of the tax solutions we discuss on our website. Not all of our services will be suitable for every client. Golden Lion Tax Solutions is here to help you find the most appropriate solution to fit your situation.