How California Residents Can Use IRS Currently Not Collectible (CNC) Status
How California Residents Can Use IRS Currently Not Collectible (CNC) Status
If you're overwhelmed by IRS tax debt and can't afford to pay — not even in installments — there's a little-known status that can offer immediate relief:
Currently Not Collectible (CNC) status temporarily stops all IRS collections if you truly can’t afford to pay.
This guide explains:
- What CNC is and who qualifies
- How to apply from California
- How CNC compares to an Offer in Compromise
- What happens while you're in CNC
- How to get help securing this relief fast
What Is IRS Currently Not Collectible (CNC) Status?
CNC is a temporary designation the IRS grants when it determines that forcing you to pay would cause serious financial hardship.
While in CNC:
- No levies or garnishments will be issued
- Collections are paused
- Penalties and interest
still accrue
- The
10-year collection statute
continues running
Who Qualifies for CNC?
To qualify, the IRS must determine that:
- You
cannot afford to
pay taxes now
- Your income barely covers your
basic living expenses
- You have no equity in assets that can be liquidated
You’ll need to submit a full financial disclosure, typically via:
- Form 433-A (individuals)
- Form 433-B (businesses)
- Supporting documents (bank statements, paystubs, rent, medical expenses)
Examples of People Who May Qualify in California
- Freelancers or gig workers behind on 1099 taxes
- Retirees living on fixed income
- Individuals facing job loss or long-term disability
- Single parents receiving government aid
- Business owners whose companies closed due to COVID-19 or market shifts
What Does CNC NOT Do?
- It does
not reduce your total balance
- It does
not forgive your tax debt
- It does
not prevent interest and penalties from continuing
- It does
not stop collections from California agencies (FTB, CDTFA, EDD)
If you also owe the Franchise Tax Board or other state agencies, you’ll need a separate resolution plan.
How Long Does CNC Status Last?
There is no fixed length — the IRS will review your case periodically, often every 1–2 years.
If your income increases or you acquire assets, CNC status can be revoked and collections will resume.
CNC vs Offer in Compromise – What’s the Difference?
| Feature | Currently Not Collectible (CNC) | Offer in Compromise (OIC) |
|---|---|---|
| Collection paused? | Yes | Yes |
| Tax balance reduced | No | Yes |
| Qualification strictness | Moderate (based on hardship) | High (based on full insolvency) |
| Forms required | 433-A/B + hardship docs | 433-A/B + Form 656 |
| Cost | Free | $205 application fee (can be waived) |
Why CNC Is a Strategic First Step
CNC can buy you time while you:
- Gather documentation for an Offer in Compromise
- Settle other debts (e.g., EDD, FTB)
- Wait out the IRS collection statute (10-year window)
Get Help Applying for CNC in California
At Boulanger CPA, we:
- Evaluate if CNC is the right fit
- Prepare and submit Form 433 with proper documentation
- Deal with the IRS on your behalf
- Monitor expiration of the collection statute
- Coordinate with California tax agencies to stop simultaneous enforcement
📞 Call 657-218-5700 or Schedule a Consultation
Frequently Asked Questions
What is IRS Currently Not Collectible status?
CNC status is a temporary pause on IRS collections for taxpayers who cannot pay due to financial hardship.
How do I qualify for CNC in California?
You must show that your income covers only basic living expenses and that you cannot afford to make any tax payments.
Does CNC eliminate my tax debt?
No. Your balance remains, and interest continues to accrue. However, CNC does pause collections and allow time to recover.
Can I be in CNC for years?
Yes, some taxpayers remain in CNC for several years — but the IRS may periodically review your finances to see if you still qualify.
Can I still owe the FTB while in CNC?
Yes. CNC only applies to IRS debts. You’ll need a separate resolution for FTB or other California agencies.
📣 About the Author
Marc Boulanger, CPA is the founder of Boulanger CPA and Consulting PC, a boutique tax resolution firm based in Orange County, California and trusted by high-income individuals and business owners across Southern California.
He is the author of Defend What’s Yours: A California Taxpayer’s Guide to Beating the IRS and FTB at Their Own Game, available now on Amazon. The book offers a step-by-step plan for resolving IRS and FTB tax debt without losing your business, your home, or your peace of mind.
With over a decade of experience resolving high-stakes IRS and State tax matters, Marc brings strategic insight to complex cases involving wage garnishments, bank levies, unfiled returns, and six-figure tax debts. He is known for helping clients reduce or eliminate tax liabilities through expertly negotiated settlements and compliance plans.
Marc is a Certified Public Accountant licensed in California and Oklahoma and holds the designation of Certified Tax Representation Consultant. He is a member of the American Society of Tax Problem Solvers (ASTPS) — the national organization founded by the educators and practitioners who have trained thousands of CPAs, EAs, and tax attorneys in IRS representation strategy.
Every case is handled with discretion, proven methodology, and direct CPA-led representation — not call center scripts.
📍 Learn more at www.orangecounty.cpa or call (657) 218-5700.
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