When talking about currently not collectible (CNC), it refers to a taxpayer who can’t pay his tax debts. The tax payer is dubbed by the IRS as “currently not collectible” when it receives enough sufficient evidence to prove the taxpayer cannot pay his tax bill. The taxpayer would usually fill out IRS Form 433-F, Collection Information Statement. Then he or she would send that form to the IRS Automated Collection System Unit.

If the IRS sees the taxpayer and realizes he/she will not be able to pay his/her tax bill, the IRS will label the tax bill as currently not collectible, and stop all collection action against the taxpayer. Although the IRS will list the taxpayer’s debt as currently not collectible, the IRS will still send an annual statement to let the taxpayer know the amount of the tax the taxpayer still owes. Some taxpayers get freaked out when they see this because they think it is a bill. But it is not. It is only a statement notifying the taxpayer of his/her current tax bill status.

Another fact about the currently not collectible status is that the 10-year statute of limitations on tax debt collections is in force and will stay that way, until either the tax is paid off, or the stature time expires. If for any reason, the IRS cannot collect any currently not collectible debt, within the 10-year time, the tax debt is erased.

If you find yourself in a bad debt situation, being declared currently not collectible is the best way to get out of your tax debt. The best way to work into this kind of situation is by seeking advice from a tax professional that happens to specialize in tax debts. This way they can assist you by getting the proper form prepared, and by showing you what the requirements are to file for the status of currently not collectible.

Here is an example of a person who has a lot of debt and had tax debt problems. The person owed the IRS $50,000 for the last three years of tax returns. The returns were already filed, but he realized he forgot to include a very important deduction that would lower his tax bill by a lot.

For this guy the best way for him to handle his situation is to look over his tax returns carefully and make sure to jot down whatever you may have missed. Then do an amended return. This will lower his tax bill. The only problem is if his income is too low to afford the cost of paying his debt. So he sends the IRS Form 433-F to let the IRS know he can’t pay his tax debt. They will look at his situation, and if they see he can’t do it, his tax debt will be listed as currently not collectible.

Being listed as currently not collectible is not for everyone, because not all people fall into that category. But for those who do, it is a godsend because it gets them out of paying for a tax debt that may just be too high for them to pay.