How Long Does A Status Of “Currently Not Collectible” Last?

“Currently Not Collectible” (“CNC”) status exists when the IRS categorizes a taxpayer’s account as uncollectible. This status may occur when the ten-year statute of limitations for collecting a tax debt expires or the IRS is unable to locate a taxpayer. It may also occur if a taxpayer maintains that he or she cannot make monthly payments to repay tax debt because such payment is an economic hardship.

If the IRS agrees with this determination, penalties and interest continue to accrue on the amount due, but the IRS will cease all enforced collection activity, which means it won’t levy, garnish or seize property, but it may file a lien. The tax professionals at the Thorgood Law Firm can help any taxpayer assert a status of “currently not collectible” if he or she is subject to any economic hardship. But if a taxpayer qualifies, how long may a “currently not collectible” status last?

Of course, as one would expect. The answer . . . varies. Since CNC status is triggered by lack of income, it stands to reason that some positive change in income will modify this status. And here’s where it gets interesting: as long as a taxpayer cannot afford monthly payments, his or her account may remain in “currently not collectible” status indefinitely. But the IRS stays on top of every individual taxpayer’s situation by reviewing each account at regular intervals, with the latter time period dependent upon what closing code the IRS has used to designate the account as “currently not collectible.” In many instances this time period is two years, while in others it is one year.

A taxpayer must file returns each year to remain eligible for CNC status. Any refund owed for any year in which a return is filed will be kept by the IRS and applied it to any outstanding tax debt. The IRS will review tax returns and may even request a financial statement to determine if there is any meritorious change in income that should alter CNC status.

Thus, as long as there is no change in income according to tax returns filed year-to-year, a taxpayer’s account may remain in “currently not collectible” status even beyond the date that the ten-year statute of limitations expires. However, once there is evidence of some positive change in income that indicates there is no longer any economic hardship, “currently not collectible” status will change and the IRS may resume enforced collection activity.

If you are in a CNC status or generally unable to pay your taxes, call THE TAX EXPERTS at the Thorgood Law Firm For a FREE consultation call 212-490-0704How Long Does A Status Of "Currently Not Collectible" Last?

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