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Non Collectible Status

What is Non Collectible Status?

Not Collectible (NC) Status is a designation the IRS can apply to your account if they determine you are unable to pay your tax debt due to financial hardship. When your account is placed in NC status, the IRS temporarily halts all collection actions, including garnishments, levies, and liens. However, this status does not eliminate the debt—it simply pauses collection efforts for an indefinite period. If your financial situation improves, the IRS may review your status and make adjustments accordingly.

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How to Qualify For Non-Collectible Status

Qualifying for NC Status requires you to provide detailed financial information that proves you cannot pay your tax debt. The IRS looks at several key factors when making this determination.

Income

Your current monthly income from all sources.

Living Expenses

Necessary living expenses such as housing, utilities, food, transportation, and healthcare.

Assets

Your liquid assets, including savings, vehicles, and real estate.

Dependents

Taxpayers can request a reduction or removal of penalties if you can show reasonable cause for why you failed to comply with the tax laws.

Key Points About Not Collectible Status

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Temporary Relief

 NC Status offers temporary relief from IRS collection efforts. The IRS will stop wage garnishments, bank levies, and asset seizures while your account remains in this status.

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Ongoing Tax Debt

Being placed in NC Status doesn’t erase your debt. Interest and penalties continue to accumulate, and the IRS may revisit your case in the future to reassess your financial situation.

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Financial Hardship

To qualify for NC Status, you must demonstrate that paying your tax debt would cause you significant financial hardship. The IRS considers factors like your income, necessary living expenses, and any dependents when evaluating your case.

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Periodic Review

The IRS typically reviews your NC Status every year to determine whether your financial situation has improved. If your situation changes, the IRS may resume collection efforts.

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Settling with the IRS or State Authorities

Tax debt negotiation offers a potential lifeline if you owe money to the IRS or state taxing authorities. By understanding the available options, the negotiation process, and the benefits of professional assistance, you can take the necessary steps to resolve your tax liabilities and regain financial stability.

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