Don’t Take ‘No’ for an Answer: Learn About Non-Collectible Status Appeals!

If you’ve recently been denied Currently Non-Collectible Status (CNC), you might feel like there’s no way out. But don’t worry—this setback isn’t the end.

Take note even when the Internal Revenue Service (IRS) says “no,” there are still paths to take and strategies to turn this into a “yes.” Rather than accepting defeat, it’s time to take action. 

This blog will outline the process of appealing a CNC denial and provide you with the knowledge and the necessary steps to take.

Understanding Non-Collectible Status

Non-Collectible Status means that the IRS has determined that you are currently unable to pay your tax debt due to economic hardship. When granted CNC status, the IRS temporarily suspends collection activities. This includes:

• wage garnishments, 

• tax liens,

• bank levies, and 

• asset seizures. 

However, it’s important to note that CNC status does not erase your tax debt. It merely pauses collection efforts until your financial situation improves or until the statute of limitations runs on the collection of your tax debt, at which point your tax debt is written off by the IRS.

5 Common Reasons for CNC Denial

Understanding why your application for CNC was denied is crucial to develop a successful appeal. The IRS may reject CNC applications for various reasons, and recognizing these common pitfalls can help you address any issues and strengthen your case. 

Here are some typical reasons for CNC denial:

Insufficient Evidence of Financial Hardship

The IRS requires comprehensive documentation to prove that paying your tax debt would cause significant financial distress. If your initial application didn’t include enough supporting documents, the IRS might not have been convinced of your inability to pay. Listed below are some of the documents to support economic hardship:

• financial statements

• medical bills

• proof of unemployment

Incomplete or Inaccurate Application

This includes missing information, incorrect financial details, or failing to respond to IRS requests for additional documentation. Make sure that every section is completed and all provided information is accurate. Keep in mind that even small errors can result in a rejection.

Changes in Financial Situation

The IRS may deny your CNC application if they believe your financial situation has improved. This could be due to an increase in income, a new job, or a change in living expenses. All of this can suggest that you might be able to pay your tax debt without undue hardship. 

Failure to Meet Eligibility Criteria

Non-Collectible Status is reserved for individual taxpayers who meet specific eligibility criteria. If the IRS determines that you do not meet these criteria, your application will be denied. 

Here are the factors that the IRS considers when evaluating applications:

• Income and Expenses

• Assets 

• Financial Hardship

Inadequate Response to IRS Communication

Effective communication with the IRS is key to ensuring that your application is complete. If you fail to respond promptly to these requests, your application may be denied. 

Steps to Take After a CNC Denial

Receiving a denial for Non-Collectible Status (CNC) can be disheartening, but it’s crucial to understand that this is not the end of the road. There are several proactive steps you can take to address the denial and strengthen your case for an appeal. 

Here’s a detailed guide on what to do next:

Step 1: Reviewing the Denial Notice Carefully

Thoroughly review the denial notice sent by the IRS. This notice will typically outline the reasons for the denial. It can range from incomplete documentation to discrepancies in your financial information.

Step 2: Gathering Additional Documentation and Evidence

Start gathering additional documentation and evidence to support your appeal. This may include:

• Updated Financial Statement (e.g. income or expenses)

• Proof of Hardship

• Detailed Expense Reports or necessary living expenses.

Step 3: Consult with a Tax Debt Attorney from J. David Tax Law

Consulting with J. David Tax Law provides you with access to experienced tax attorneys for CNC appeals. has

Their legal team has about 40+ years of combined experience and can identify any weaknesses in your initial application. This will serve as one of our foundations to prepare the best strategy for your tax issue.

Here’s how they can help you: 

• Review Your Case: Analyze your initial application and the reasons for denial, helping identify areas that need strengthening.

• Assist with Documentation: Help you gather and organize the necessary documentation, ensuring that nothing is overlooked.

• Represent You: Provide representation during any interactions with the IRS, including hearings and negotiations, ensuring that your case is presented effectively.

Step 4: Preparing and Submitting the Appeal

With your additional documentation and professional guidance in place, you’re ready to prepare and submit your appeal. 

Here’s what you need to do for the appeal process:

1. Fill out the appropriate appeal forms accurately and thoroughly. The IRS may require Form 9423 (Collection Appeal Request) or other relevant forms.

2. Include all additional evidence and documentation that supports your claim for CNC status. Ensure that your appeal package is complete and well-organized.

3. Be mindful of the deadlines for filing an appeal as it can jeopardize your chances of success. 

4. Submit your appeal promptly and follow up to confirm receipt by the IRS.

Are there Alternative Resolutions if CNC Appeal is Denied?

While a CNC appeal denial is not the outcome you hoped for, it doesn’t mean all avenues are closed. There are other viable solutions to address your tax debt.

Let’s take a look at some viable alternatives: 

• Installment Agreement – This allows you to pay your IRS tax debt in manageable monthly payments. 

• Offer in Compromise – This gives you the option to propose to settle your tax debt for less than the full amount owed.

Conclusion

A CNC denial might feel like a major setback, but many have faced this challenge and emerged successfully. 

Here at J. David Tax Law, you have the chance to overturn CNC denials and achieve the relief you need. Their legal is here to help you pave the way to financial relief and stability.

Don’t lose hope—reach out to us today and take the first step towards financial stability.