The Internal Revenue Service (IRS) will place a taxpayer’s account in a Currently Not Collectible (CNC) status once it is shown that the IRS cannot collect the back taxes from the taxpayer by full payment, through an Installment Agreement, or by way of Offer in Compromise. Once the account is placed in a CNC status, the IRS does not pursue collection activity against the taxpayer and the statute of limitations on the tax liabilities will continue to run. Generally, unless the taxpayer’s financial situation improves, the account will remain in a CNC status until the tax liabilities expire. If the taxpayer’s financial situation improves, the account will be taken off CNC status so the IRS can collect the back taxes through full payment or an Installment Agreement.
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