Currently Noncollectible (CNC)
If a taxpayer is not able to pay the delinquent amount owed by way of an installment agreement or an offer in compromise, we can request that the IRS place this taxpayer’s account on a status called currently noncollectible. Only taxpayers with negative monthly cash flow will qualify for currently noncollectible status.
This currently noncollectible status removes the taxpayer’s account from active collection efforts by the IRS and will remain in effect until the taxpayer’s financial situation changes or until the tax liability runs out. It does not remove or eliminate the tax debt; it only puts it on hold. The tax debt is still owed and will continue to accrue penalties and interest, and the IRS and FTB statute of limitations will continue to run during this time.
If a taxpayer’s income increases to a level that makes it possible to make payments to the IRS, the taxpayer will be notified by the IRS that collection activities on his or her delinquent account will be reinstated.
While a taxpayer is in CNC status, his or her credit rating may be negatively affected as the IRS will generally file a lien against the taxpayer’s property.
If you are being audited or are having collections issues with the Internal Revenue Service, Franchise Tax Board or any other state or local tax authority, contact the tax attorneys at David Lee Rice, A Professional Law Corporation, at 310-517-8600 immediately.