The process forsetting up currently not collectible status (CNC) involves providing informationto the IRS to show that you cannot pay with current assets and you do not haveenough income to meet your necessary household living expenses.  The process is similar to setting up an abilityto pay installment agreement in that you will show the IRS your sources ofincome, your necessary paid household expenses, and any equity in assets thatcan be used to pay the IRS.

Taxpayers can completeForm 433 (A, B, or F – depending on their circumstances) and provide thisinformation to the IRS over the phone or by mail. Many taxpayers who aresubject to pending IRS collection enforcement activity (liens, levies, orpassport restrictions) should contact the IRS by phone and provide the Form 433information orally.

The taxpayer shouldalso provide supporting documents to the Form 433. These include, but are notlimited to:

  • Paystubs
  • Bank statementsfor all accounts
  • Retirementaccount statements and retirement plan information
  • Investmentaccounts
  • Savingsand other cash on hand
  • Any othersources of income, such as business income. For business income, a profit/loss statement for the past year
  • Allhousehold expense receipts for necessary living expenses (housing, utilities, carpayments, medical bills, health insurance, taxes paid, etc.)
  • Statementsshowing amounts owed (credit cards, car notes, mortgage notes, etc.)

The IRS may requestother documents to understand your ability to pay.  When the taxpayer calls the IRS and provides themthe Form 433 information, the IRS will ask for any information needed tofinalize the agreement.  If the taxpayerhas the information, they can fax it to the IRS representative while on the call.  If not, they can send the information to theaddress provided by the IRS representative.

Once you haveproven you cannot pay with assets or with monthly income after necessary livingexpenses (called “monthly disposable income”), the IRS will approve your CNC status.   Your IRS account transcript will reflectthis status – usually with IRS transaction code “530” that denotes that you arein CNC status.

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