There are times where you agree you owe the IRS, but you can’t pay due to your current financial situation. If the IRS agrees you can’t both pay your taxes and your reasonable living expenses, it may place your account in Currently Not Collectible (CNC) status.
While your account is in CNC status, the IRS generally won't try to collect from you. For example: It won’t levy your assets and income. However, the IRS will still assess interest and penalties to your account, and keep your refunds and apply them to your debt. You'll also continue to receive an annual bill from the IRS because that is required under the law.
Before the IRS will place your account in CNC status, it may ask you to file any past due tax returns.
If you request CNC status, the IRS may ask you to provide financial information, including your income and expenses, and whether you can sell any assets or get a loan.
During the time the IRS may collect the balance you owe, it may review your income annually to see if your financial situation improved.
Generally, the IRS can attempt to collect your taxes up to ten years from the date they were assessed, though the ten-year period is tolled in certain circumstances. The time the suspension is in effect will extend the time the IRS has to collect the tax.
Because the IRS won’t suspend interest and penalty charges, you may want to consider other possible payment options within your means before asking the IRS to place your account in CNC status.
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