Do you owe the IRS or State but have no disposable income to pay? If so you may qualify for Currently Non-Collectible status (“CNC”) ?

Generally speaking, if you owe the IRS or State more than you can afford to pay, you are allowed to make payments over a given period of time. Assuming you have the ability and owe less than $50,000, the IRS allows you to full-pay your balance over a 72-month period. This is known as a streamlined installment agreement.

If you cannot pay off your balance in full you may claim hardship. By claiming hardship, you make payments based upon your ability to pay and not based upon the amount you owe.

How it works

As mentioned above, by claiming hardship the IRS bases your payment amount on your ability to pay. They calculate your monthly disposable income (“MDI”) by taking the amount you take home each month and subtracting out what they consider to be necessary and reasonable living expenses. If this calculation indicates you spend the same amount or a higher amount than you take home, the IRS will allow you to pay nothing; in essence, you are entering into a $0 installment agreement.

This process is referred to as entering into Currently Non-Collectible status (aka Currently NOT Collectible status). Not only does being placed into CNC status take the pressure off of paying back taxes but it also allows the taxpayer to stay up to speed on paying current and future tax obligations.

This process sounds simple but you should know that the IRS has strict rules pertaining to what they consider to be necessary and reasonable living expenses when considering what you are able to pay. If the IRS sees that you are paying for items they will not consider in their calculations (such as certain loan payments and credit card expenses), you may be forced to pay an amount each month that from a practical standpoint is not affordable

We can help

The Tax Resolution Institute knows EXACTLY what the IRS will and will not allow. By planning properly and creating a comprehensive package to submit to the taxing agencies, we ensure that if you qualify, you will be placed into CNC status.

Skip to content