How Do You Qualify For ‘Currently Not Collectible’ Status With the IRS?

You’ve incurred considerable tax debt and are concerned about your inability to pay; what now? If installment payments are not currently an option, it may be worth your while to explore an alternate approach: Currently Not Collectible (CNC) status. Read on to learn more about this option — and how qualification works:

What Does It Mean to Be ‘Not Collectible’?

If the IRS deems your account “Currently Not Collectible,” you have been determined to be incapable of covering both your necessary living expenses and the taxes you presently owe. When you obtain CNC status, you can hold off on paying taxes without fear of suffering garnished wages or a levied bank account. Your tax debt won’t go away and the balance will continue to accrue interest — but you’ll gain a little breathing room as you determine how to get your finances in order.

Providing Your Eligibility for ‘Currently Not Collectible’ Status

The IRS requires extensive documentation from those seeking CNC status. First, your ‘total positive income’ will be calculated. This term refers to any instance of positive value occurring on your tax return. Examples include wages, interest, self-employment income, and real estate income. Your income will be compared to average living expenses on both a national and local basis. Living expenses may include:

  • Food
  • Clothing
  • Out-of-pocket health care costs
  • Housing and utilities
  • Transportation

Once reasonable living expenses have been compiled, they will be deducted from your total positive income to determine your net disposable income. This final figure may indicate whether you can afford to make regular payments on your delinquent account.

Do you believe your account qualifies for CNC status? Feel free to seek feedback from the team at Highland Tax Resolution, which can offer insight into your tax situation. Call 720-398-6088 for more information.