Currently Not Collectible

Don’t ignore the notices you get from the IRS about your balances due.

If you decide to request CNC status, you should:

• File prior year tax returns (if you were required to file a return), even if you can’t pay the amount you owe right now.
  • If you need help preparing your tax returns and can’t afford to pay a tax return preparer, consider free file options.
  • If you meet the requirements, you might be able to have your return prepared for free at a Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) site.
  • The IRS may place your accounts in CNC status, even if you have unfiled returns and are in a hardship situation, if you meet the requirements.
  • Continue to make Estimated Tax Payments and Federal Tax Deposits on time.
• Continue to file your returns on time even if you can’t pay. This will prevent late filing penalties.
• Gather your information to verify your income, expenses, and any debts you owe (loans, etc.). You may need to provide the IRS this financial information so it can decide whether to grant your request.

If the IRS decides you can make some type of payment and you still disagree, you may:

• Request a conference with the IRS Collection Manager. IRS employees are required to give you the name and phone number of their supervisor.
• Hire an attorney, Certified Public Accountant (CPA), or Enrolled Agent (EA) to represent you. If your income is below a certain level, you may qualify for assistance from a Low Income Taxpayer Clinic.
• Appeal certain collection actions the IRS is taking or proposing. See Publication 1660, Collection Appeal Rights.

If the IRS places your account in CNC status

• The IRS may keep your tax refunds and apply them to your debt.
• You can still make voluntary payments.
• The IRS shouldn’t levy your assets or income, unless later federal tax liabilities arise to remove you from an uncollectible status.
• The IRS may file a Notice of Federal Tax Lien (NFTL) even if your account is placed in CNC status. The filing of an NFTL can affect your credit rating, and your ability to sell property or other assets.
• The IRS may contact you to update your financial information to be sure your ability to pay hasn’t changed.
• The IRS is required by law to notify the State Department if you are certified as owing a Seriously Delinquent Debt. But, the IRS has discretion to exclude debts from Passport Certification, that are CNC.

What if I still can’t pay in the future?

If the IRS sends you a notice about your tax bill, call the number on the notice to discuss your financial situation. The IRS will take your updated information and decide if you still can’t pay your IRS debt and meet your living expenses. Make sure you have all the information about your income and expenses before you call.

You may prevent future tax liabilities by adjusting your withholding, making estimated tax payments or Federal Tax Deposits.

New Tax Reform implementation changed the way the IRS calculates your federal tax. The IRS encourages everyone to perform a quick “paycheck checkup” to ensure you have the right amount withheld.

You may use the IRS withholding calculator to figure your federal income tax and withholding. The withholding calculator is a tool on IRS.gov designed to help you determine how to have the right amount of tax withheld from your paychecks.

When you use the withholding calculator, it will help you determine if you need to adjust your withholding and submit a new Form W-4, Employee’s Withholding Allowance Certificate, to your employer.