Currently Not Collectible (CNC)

If an offer or installment agreement is not feasible, the IRS may agree to postpone further collection action informally but usually for no more than 30 days or it may formally determine that the account is “Currently Not Collectable” (“CNC”). Placing a client in CNC suspends all collection and enforcement activity. It also will cause the IRS to release any levy.  Because an account is reported CNC on Form 53, in IRS jargon the Revenue Officer “53’s” the account.

Revenue Officers, Appeals Officers, and Settlement Officers may report accounts as CNC.  Be aware that in many cases as part of agreeing to place an account in CNC, the IRS may file a Notice of Federal Tax Lien. This is more likely to be done for cases with a balance due over $10,000.  2011 TNT 38-2.

Upon a determination of CNC status, the Service will immediately release any levies on wages or salary. I.R.C. § 6343(e); I.R.M. 5.16.1.2.9(7).  However, since offsets from Social Security, Disability Payments or other federal programs may not occur until the next month. In hardship cases, you can submit a Form 911 to the local Taxpayer Advocate requesting refund of the levied upon amount. In doing so, the burden is on the taxpayer to show that it is indeed a hardship. Usually, the Taxpayer Advocate will require a completed and signed Form 433 A or 433 F (collection information statements (“CIS”)) to accompany the Form 911. Collection of the liability would create an undue hardship for taxpayers by leaving them unable to meet necessary living expenses.

During the period the account is in CNC status, the IRS will automatically offset any future refunds due the taxpayer against the delinquent tax liability. Many accounts that are in CNC are eventually satisfied by refund offsets or by operation of the federal tax lien when the taxpayer sells property.

For further explanation, feel free to contact our legal counselors. We will walk you through the entire process.

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