Myths And Facts About IRS Currently Not Collectible Status

Currently not collectible (CNC) status can provide much-needed relief for taxpayers who are desperate for a break from the stress of tax debt. This approach is not for everyone, however.

Below, we sort through some of the most noteworthy myths and facts to help you determine whether CNC status might be a realistic option for your tax situation.

Interest and Penalties

Myth: Currently not collectible allows you to avoid accumulating interest on your tax debt.

Fact: If you’re determined to avoid interest as you pay off your tax debt, currently not collectible may not be an ideal solution. While your account is in CNC status, you will continue to be charged interest. This could make the prospect of paying off your debt even more burdensome in the future.

Defining Significant Hardship

Myth: Anyone dealing with financial difficulties can qualify for CNC status.

Fact: Qualifying for CNC can be surprisingly difficult. The IRS is not generous in its definition of “significant hardship,” which is required to be granted this brief hiatus from tax obligations. According to the agency, significant hardship only occurs if making payments would cause individuals or their families to go without the necessities of life.

Options for IRS Relief

Myth: Currently not collectible is the only option for gaining relief from the IRS.

Fact: This statement is true in that, for most people, tax payments cannot simply be halted without negative consequences. Still, other options can make tax concerns easier to manage — and often, without the level of interest or penalties that accompany CNC. Top options include offers in compromise and installment agreements.

Are you interested in seeking currently not collectible status with the IRS? The team at the Highland Tax Group can help. Reach out today to learn how we can advocate on your behalf.