In majority of cases, the IRS will not stop collecting from you until you’ve fully paid your tax debt. This means that you must file all missing tax returns and any deal with ongoing underpayments. With the help of IRS tax lawyers, however, you can file for a “currently not collectible” (CNC) status to stop the IRS from sending letters of notification, filing levies against your properties and enforcing collections so you can live in peace—even just temporarily.
To apply, the IRS Form 433-A or 433-F is submitted along with a detailed financial disclosure showing your assets, expenses, and income, which may include car loan statements, mortgages statements etc. Such forms serve as an information statement proving that you’ll undergo financial hardship if the IRS continues its collection.
If you’re approved, this doesn’t mean your tax debt is forgiven though. The penalties and interest will continue to build up. Your case is merely taken out of the active collection inventory temporarily and you will lose your status once the IRS confirms through a review that your income has increased. They usually mark a follow-up date for review and reactivates accounts for collection after a set period has elapsed.
The main advantage of getting approved for CNC is that you can protect your wages, bank accounts, and properties from the IRS’s aggressive collection tactics and determine more efficient solutions in managing your finances vis-a-vis taxes while safe from their intrusions.