Currently Not Collectible CNC Flashcards
Definition of Currently Not Collectible: What is the Currently Not Collectible status?
It’s a temporary status where the IRS agrees not to collect a taxpayer’s outstanding tax liability due to financial hardship. (IRC § 6343(a); IRS Policy Statement 5-71)
Criteria for CNC Status: What are the criteria for qualifying for CNC status?
The taxpayer must demonstrate financial hardship, meaning the collection would create an undue hardship or would be unfair and inequitable. (IRC § 6343(a); Internal Revenue Manual (IRM) 5.16.1)
Effect on Collections: How does CNC status affect IRS collections?
While in CNC status, the IRS generally halts active collection activities but may still file a Notice of Federal Tax Lien (NFTL). (IRC § 6321, 6323; IRM 5.16.1)
Interest and Penalties: Does interest and penalties continue to accrue during CNC status?
Yes, interest and penalties continue to accrue on the unpaid balance. (IRC §§ 6601, 6651)
Review of CNC Status: How often is CNC status reviewed?
CNC status is typically reviewed every 1-2 years, or when the taxpayer’s financial situation changes. (IRM 5.16.1.2.9)
Duration of CNC Status: How long can CNC status last?
CNC status lasts until the taxpayer’s financial situation improves or the collection statute expires, generally ten years from the assessment. (IRC § 6502)
Applying for CNC Status: How can a taxpayer apply for CNC status?
By submitting a detailed financial statement (Form 433-A or 433-F) and other supporting documents to the IRS, demonstrating financial hardship. (IRM 5.16.1)
Effect of CNC on Tax Refunds: How does CNC status affect future tax refunds?
While in CNC status, future tax refunds may be applied to the outstanding tax liability. (IRC § 6402)
Rights to Appeal CNC Determination: Can a taxpayer appeal a CNC determination?
Yes, a taxpayer may appeal a CNC determination through the IRS Collection Appeals Program (CAP) or Collection Due Process (CDP) hearing. (IRC §§ 6320, 6330; Treas. Reg. § 301.6330-1)
