If a taxpayer does not qualify for an Offer in Compromise and cannot afford to pay an Installment Agreement a Currently not Collectible (CNC) status may be an option. If a client is placed in CNC status, the statute of limitations continues to run and the IRS will not pursue collection actions. However, if a taxpayer’s financial status improves, the IRS can remove the file from CNC status and return it to an active collection status.

Reasons for attempting CNC status:

• Taxpayer has income below allowable expenses and there is no indication that the financial situation will improve in the future.
• Due to high equity, the taxpayer does not qualify for an OIC and has more allowable expenses than income so an Installment Agreement is not an option.
• Taxpayer has more allowable expenses than income and the statute of limitations is getting close to expiring.