Currently Not Collectible (CNC) status means that you currently do not have the ability to pay your tax liability. Every year when you file your return the IRS will look at your income. If your income increases, the IRS will review your CNC status and they may determine that you need to prove that you still do not have the ability to pay.
CNC status may or may not be a permanent solution to your problem. I recommend that you contact a tax professional to discuss if you are eligible for an Offer in Compromise to settle your tax liability permanently. Stay away from the places you see on TV. AVVO has a find a lawyer feature and most of us offer a free consultation.
They will take your tax refunds while you are in CNC status.
If you have any additional questions please feel free to contact me directly.
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Ms. Campbell's answer is correct. Your tax "refund" will indeed be kept by the IRS and the Georgia Department of Revenue. Your status means that they will not be actively attempting to collect from you, but interest will still accrue on your balance. My experience is that they will ask you to fill out a financial statement to re-examine your CNC status at approximately two years from the time it was instituted. Try to adjust your withholding so that you do not have a large refund.
This is not intended to be legal advice, and is general in nature.