To see if you qualify for CNC status, you'll need to contact the IRS. If you have a notice, use the contact information included there. Just because it's currently not collectible doesn't mean that the debt will go away, but rather that the IRS has determined that you can't pay the debt right now. Before we approve your request for late collection, we may ask you to complete a collection information statement (Form 433-FPDF, Form 433-APDF, or Form 433-APDF, or Form 433-BPDF) and to provide proof of your financial statement (this may include information about your assets and your monthly income and expenses).
You should know that if we delay your collection, your debt will increase because you will be charged penalties and interest until you pay the full amount. During a temporary delay, we will re-review your ability to pay. We can also file a federal tax lien notice to protect the government's interests in your assets. CNC status can only eliminate your tax liability when the CSED does not improve your financial situation.
Even if a taxpayer can resolve the process without help, people who aren't lawyers might assume that things are finished when they aren't, leaving the IRS free to continue with its collection efforts. The current non-collectible condition can give you time to get back on your feet and find a way to pay the IRS without the immediate threat of collection activity. Be sure to make it clear that you can't afford any payments (instead of simply not being able to pay the full amount). If you are granted non-collectible status, it's a good idea to ask the IRS for information about the code that was assigned to you.
If your financial situation will improve soon and you'll have to start paying the IRS, applying for CNC status may not be your best option. Of course, if your financial situation improves, you'll lose your CNC status and the IRS will try to collect your money again. To receive currently uncollectible status, paying your taxes must cause significant difficulties. You may need to complete a version of Form 433, Collection Information Statement for Salaried Workers and Self-Employed Persons.
Every new tax return from a person in state 53 will be examined to determine if the taxpayer can now start paying the debt. If you don't currently qualify for non-collectible status, you can opt for an installment agreement to make your tax payments more manageable. The IRS will have a trigger factor, called a “closing code”, to revoke the current non-collectible status if your income reaches a certain level. Initially, the IRS will consider that a taxpayer's debt is currently not collectible for a one-year period.
Tax debt isn't eliminated; the IRS simply must suspend its efforts to collect back taxes, and penalties and interest may still accrue.