LEGAL GUIDE
Written by attorney Phillip Monroe Smith | Jul 31, 2013

IRS UNCOLLECTIBLE STATUS

The IRS puts many taxpayers into the “Uncollectible Status" category or classifies them "Currently Not Collectible" (CNC) every year. This status means that the IRS will not pro-actively seek back taxes from a taxpayer because of a validated economic hardship. If the taxpayer’s finances improve (as the IRS will monitor) collection efforts will resume.

This it is not easy to prove unless you provide full financial disclosure through form 433A or a Collection Information Statement. In other words, being classified CNC is not something that you can easily get from the IRS because it requires that you disclose your complete financial situation, or other reason for claiming hardship, and provide full supporting documentation.

You must prove to the IRS that you cannot afford to pay your tax debt, and you can do that by providing your income, necessary expenses, and assets on form 433. You may be temporarily or permanently disabled, or also suffer some other form of distressed physical condition which could cause the IRS to consider your tax status to be Currently Not Collectible.

If you receive uncollectible status, the IRS will not attempt to immediately collect any money from you, however penalties and interest will continue to accrue on the unpaid tax.

Some states also have uncollectible status. Check with your state taxing agency to be provided with their policy on this matters.

Rate this guide


Can’t find what you’re looking for?


Post a free question on our public forum.

Ask a Question

- or -

Search for lawyers by reviews and ratings.

Find a Lawyer