Currently Not Collectible status (also known as CNC status) is a temporary option for people who owe back tax debt, but that are unable to pay this debt due to financial hardship. To qualify, you need to be able to show the IRS that:
Your wages cover no more than your necessary living expenses so that there is no amount the IRS can garnish
You have no assets that the IRS would consider worth levying. Any item that you own more than 20% of would be an asset that can be levied. A levy is a seizure of a assets, such as a home or vehicle.
You may need to provide documentation of your financial hardship as well as fill out a form about your financial status.
This is a temporary solution - if your financial situation improves the IRS will resume their collection process. Interest and penalties will have accrued during your Currently Not Collectible status. You will need to continue to provide documentation that you are unable to pay to maintain this status.
If the 10-year statute of limitations for back taxes expires while you have Currently Not Collectible status, the tax debt itself will become permanently not collectible and no other form of tax resolution will be needed.
To determine whether you qualify and to move forward with this type of IRS agreement, contact the Tax Man now.