So you were able to negotiate a currently not collectible (CNC) status with the IRS. That means you do not have much now or you are under a hardship. If the hardship is alleviated, will the IRS ask you to start paying again? The answer is yes. Based on the IRS Automated Collection Service (ACS) or Revenue Officer (RO) financial examination, the CNC status will have a “closing code” that is associated with the CNC.
This closing code (CC) indicates a level of adjusted gross income (AGI) that needs to be exceeded in order to have the CNC sent back to ACS/RO for reconsideration. These CC inputs are based on the financial examination. For example, if the ACS puts your account in CNC with a CC 32, the IRS will wait until your tax return, as filed or adjusted, is over $84,000 in AGI, to request reevaluation of the CNC.
In short, the CNC is not forever. The IRS also puts taxpayers in “default” CNC or “unable to contact CNC” after collections have become futile or the taxpayer cannot be found. In my experience, the IRS has been sporadic in reevaluating CNC status. Also, the new allowable living standards will eliminate many higher income CNCs.
However, the future will bring a more sophisticated IRS with more resources and automation that will reduce the number of CNCs. Don’t think that your tax debt will automatically disappear once you enter into a CNC. A professional tax resolution firm may be able to help if a change in your financial situation ends your CNC status and your tax debt still looms.