Tax Hardships – Currently Not Collectible Status

Currently Not Collectible status is meant for people who are in financial hardship situations, no matter if temporary or permanent. These taxpayers simply do not have the means to pay back their taxes, even in monthly installments. Generally, if your monthly necessary expenses are equal to or higher than your monthly income, you are considered “currently not collectible,” and therefore are not required to make monthly installment payments. To be placed in this tax relief status, taxpayers must go through an analysis by the IRS. Since there are many ways to calculate income and expenses, it can get complicated. You should know what your options are. With our tax attorneys on your side, we will fight for you and help you in any way we can.

What Happens When You Are Placed in Currently Not Collectible Status?

Being granted Currently Not Collectible (CNC) status does not eliminate your tax debt — it temporarily suspends the IRS’s ability to pursue active collection against you. This means the IRS will halt wage garnishments, bank levies, and other collection actions for as long as the status remains in place. However, interest and penalties will continue to accrue on the outstanding balance during this period.

The IRS typically reviews CNC cases periodically. If your financial situation improves — such as an increase in income or a reduction in necessary living expenses — the IRS may determine that you are no longer eligible and resume collection activity. This is why it is important to understand that CNC status is often a temporary measure rather than a permanent resolution.

For some taxpayers, CNC status serves as a strategic stepping stone. It can provide the breathing room needed to explore other long-term relief options, such as an Offer in Compromise or an installment agreement, once your financial picture stabilizes. Contact the attorneys at Montgomery & Wetenkamp to help you evaluate whether Currently Not Collectible status is the right immediate solution and what your best path forward looks like.