Office in Freehold NJ | 
You owe the IRS, but your income barely covers your bills. You want to deal with the taxes. You just do not know where the money would come from. There may be an option that gives you breathing room. The IRS may agree to not collect against you until you get back on your feet. At Tomes Law Firm, our team brings tax resolution experience to helping New Jersey residents understand their choices. That starts with looking at what they can actually afford.
Currently Not Collectible status, often called CNC, allows the IRS to pause most collection efforts when paying would leave you unable to cover basic living expenses. It does not erase your debt. Interest and applicable penalties continue to grow.
Here is what that means and what to consider before asking for it.
Who qualifies for Currently Not Collectible status?
The main question is whether you can pay the IRS while still covering necessary living expenses.
A job loss, illness, disability, or limited retirement income may make CNC worth exploring. But there is no single income limit that guarantees approval. The IRS looks at your income, reasonable living expenses, and assets. Having a job does not automatically disqualify you.
For example, imagine a New Jersey resident whose work hours were cut while medical costs increased. After paying for housing, food, utilities, transportation, and care, there is nothing left.
That situation may support a hardship request. It still needs to be backed by records. This is a hypothetical example, not a client result.
Will the IRS accept all my monthly expenses?
Not necessarily. The IRS uses collection standards when reviewing living expenses. What you spend and what the IRS allows may differ.
That is why a complete financial picture matters. Necessary expenses above the usual limits may need an explanation and proof. Health, age, dependents, and other circumstances can affect the hardship review.
For a New Jersey household, housing and commuting costs can take a large share of each paycheck. Do not leave out a necessary expense because you assume it will not count. Gather the records so it can be evaluated.
Can I qualify if I own a home or have savings?
Possibly. Ownership alone does not answer the question.
The IRS considers whether assets can be used to pay the debt and whether doing so would cause hardship. Its procedures allow some hardship cases to be placed in CNC even when the taxpayer has equity in assets. The reasons must be documented.
Before cashing out retirement savings or borrowing against your home, have the full situation reviewed. Those decisions deserve careful thought.
How do I request Currently Not Collectible status?
You or your representative can contact the IRS using the number on your notice. The IRS may require a financial statement, such as Form 433-F or Form 433-A, and supporting records.
Be prepared to provide:
- Proof of income.
- Recent bank statements.
- Housing and utility bills.
- Medical and insurance costs.
- Information about property, loans, and other assets.
Ask for confirmation of the decision and which tax periods it covers.
If a deadline is approaching, address it promptly. Do not assume that asking about hardship protects every appeal right or stops an existing collection action.
Is Currently Not Collectible status permanent?
CNC is a pause in collection, not a promise that you will never have to pay.
For some people, their finances never improve enough to resume payments. Their accounts may remain in CNC status until the IRS’s legal time to collect expires.
For others, the pause ends. If your financial situation improves enough that you can afford payments, the IRS may remove CNC status and resume collection. There is no fixed length of time that the protection lasts.
While your account is in CNC, interest and applicable penalties continue to grow. The IRS may still apply federal tax refunds to your debt and file a Notice of Federal Tax Lien.
Can CNC help if the IRS is already taking my wages or pension?
It may. If collection is causing financial hardship, CNC and release of the levy may provide relief. If money is already being taken, make that clear when seeking help.
A pending hardship request, CNC approval, and a processed levy release are different steps. Follow-through matters.
How we helped John stop a $572 monthly pension levy
The IRS was taking $572 each month from John’s pension. That was money he no longer had available for his living expenses.
Our team at Tomes Law Firm helped get his account placed in Currently Not Collectible status and secured a release of the pension levy. That stopped the $572 monthly deduction.
His tax debt was still there, but the monthly levy was no longer taking part of his pension.
John’s experience shows why it is worth reviewing your options even after collection has started. An existing levy does not mean it is too late to seek help.
What if the levy keeps going after CNC approval?
Do not assume the deductions have stopped just because a CNC request was submitted. Confirm that the IRS approved the request, issued the levy release, and that your employer or pension provider processed it.
We saw why this matters in Allison’s case. The levy continued even after CNC approval. Our firm had to contact IRS Counsel and a congressional office to resolve the problem. We were able to get three months of the money back.
If another deduction appears after approval, contact your representative promptly. Keep the pay stubs, pension statements, or other records showing what was taken and when. Getting CNC approval is an important step. Making sure the levy actually stops is another.
Client details have been limited to protect privacy. Results depend on individual circumstances.
Does the IRS collection deadline keep running?
Generally, yes. CNC status by itself does not stop the collection clock.
The IRS usually has 10 years from the date it assesses a tax to collect it. That is not necessarily 10 years from the tax return’s due date.
Bankruptcy, an offer in compromise, certain appeals, and other events can change the deadline. Different assessments can also have different expiration dates.
Before relying on an approaching deadline, have your account transcripts and history reviewed. Guessing from the tax year alone can lead to a costly mistake.
Is CNC the same as settling my taxes?
No. CNC pauses collection based on your current finances.
An offer in compromise seeks to settle eligible tax debt for less than the full amount. A payment plan spreads payments over time. Each option serves a different purpose.
The first question should be: What can you afford after meeting necessary expenses? The answer helps guide the next step.
Does IRS Currently Not Collectible status cover New Jersey tax debt?
No. IRS CNC status applies to federal tax collection. It does not automatically stop collection by the New Jersey Division of Taxation.
If you owe both the IRS and New Jersey, both debts need attention. Do not assume that resolving the federal collection issue also resolves the state one.
What should I do while my account is in CNC?
Keep filing required tax returns, even if you cannot pay. Review your withholding or estimated tax payments so you do not keep adding new debt.
Keep a copy of your CNC approval and any levy release. Check your pay or pension statements to make sure deductions have stopped.
Open every IRS notice. If the IRS asks for updated financial information, respond by the deadline. Let your tax representative know about significant financial changes. If the IRS says you can now afford payments but your necessary expenses still leave you struggling, have that decision reviewed promptly.
What should I do now?
Start with your latest IRS notice, income records, and a realistic list of household expenses. Include costs that do not occur every month, such as necessary medical care or annual insurance bills.
You do not need to have every answer before asking for help.
Tomes Law Firm helps New Jersey taxpayers review their finances, understand collection notices, and evaluate tax resolution options. If you are worried that paying the IRS will leave you unable to pay for basic needs, contact Tomes Law Firm to schedule a confidential free consultation at 732-333-0681 or 833-4IRS-TAX on online at tomeslaw.com
We Solve Tax Problems. You Get Peace of Mind.
Helpful resources
IRS: Temporarily Delay the Collection Process