A Florida HVAC Contractor Catches a Break from the IRS

Running a small HVAC and refrigeration repair business means the work is never steady. Some months bring in enough to cover payroll and parts with room to spare. Other months, a slow stretch of calls or a broken service van can wipe out the cushion fast. That kind of up and down income is exactly what put one air conditioning and refrigeration contractor from Florida on the wrong side of the IRS, and it is also exactly the kind of situation Currently Not Collectible status was built for.

How it started

The business, a small HVAC and refrigeration repair company based near Spring Hill, Florida, had fallen behind on its federal tax obligations over a period of lean years. Like a lot of service businesses, cash came in unevenly, and at some point paying vendors and keeping trucks running took priority over sending a check to the IRS. That is a common story, and it is rarely about carelessness. It is about triage. When the choice is between making payroll this week or paying last year’s tax bill, most owners choose payroll.

By the time the owner reached out to PFGTAX in early 2018, the case had grown into something he could not manage on his own. The business had unresolved tax debt, and there was real concern about what the IRS might do next.

The pressure from the IRS

Once a tax debt goes unaddressed long enough, the IRS moves from sending notices to actively trying to collect. That can mean liens filed against property, levies against bank accounts, or garnishment of receivables. None of that had reached a breaking point yet in this case, but the risk was real and growing every month the debt sat unresolved.

The owner and his family depend on the business for their income, so any levy or seizure of funds would have hit their household directly, not just the company books. That is the pressure point PFGTAX sees constantly with small business owners. The business and the person are the same wallet.

What we did

PFGTAX took over communication with the IRS right away, which stops the back and forth of notices landing in a business owner’s mailbox with no one to help make sense of them. Our team pulled together a full financial picture using IRS Form 433-A for personal finances and Form 433-B for the business, both of which lay out income, expenses, assets, and what is actually left over each month after the bills are paid.

That financial statement is the heart of any collection case. The IRS does not take a business owner’s word for how much they can afford to pay. It wants bank statements, vehicle and equipment values, receivables, and a real accounting of monthly income against necessary expenses. Our team gathered that documentation, prepared the forms, and submitted a request that the case be classified as Currently Not Collectible, meaning the taxpayer’s finances show no ability to pay anything toward the debt right now without risking basic living and business expenses.

This process took time. Financial documentation went back and forth through 2018, and the IRS reviewed the numbers before making a decision.

The outcome

In December 2018, the IRS approved the request. The account was placed in Currently Not Collectible status, which means active collection stopped. No levies, no garnishment, no forced sale of equipment to satisfy the debt.

Currently Not Collectible is not the same as forgiveness. The debt stays on the books, interest and any applicable penalties keep accruing, and the IRS will still send an annual reminder notice showing what is owed. Any federal or state refund the taxpayer would otherwise receive continues to be applied against the balance instead. But the day to day threat of aggressive collection action is gone, and that gives a struggling business room to breathe and keep operating.

Why it matters

For a small business owner, the difference between an active IRS collection case and a Currently Not Collectible one is the difference between constantly looking over your shoulder and being able to focus on the work in front of you. It does not erase what is owed, and it comes with a real condition attached: the taxpayer has to stay current on all future filings and payments, or the CNC status can be reversed and the debt starts accruing further.

That condition matters. PFGTAX tells every client in this position the same thing. Getting CNC approved is not the finish line. It buys breathing room, and what a business does with that room determines whether the underlying problem actually gets solved over time.

Frequently asked questions

What does Currently Not Collectible actually mean?

It means the IRS has reviewed a taxpayer’s financial situation and agreed that they cannot pay anything toward their tax debt right now without it interfering with basic living or business expenses. Under IRM 5.16, the IRS can suspend active collection when a taxpayer’s allowable expenses use up all of their available income. The debt is not gone, but the IRS stops trying to collect for as long as the status holds.

Does the tax debt go away once CNC is approved?

No. The balance remains, and interest and any penalties continue to accrue during the CNC period. The taxpayer will keep getting an annual notice showing the current balance, and any tax refunds due will be applied to the debt instead of being paid out.

Can the IRS still file a lien while a case is Currently Not Collectible?

Yes, in some cases. CNC status stops active collection like levies and garnishment, but it does not automatically prevent the IRS from filing or keeping a federal tax lien in place, depending on the size of the balance and the taxpayer’s history. Every case is reviewed on its own facts.

How long does Currently Not Collectible status last?

There is no fixed end date. The IRS periodically reviews CNC accounts, often when it sees signs that a taxpayer’s financial situation has improved, such as increased income on a filed return. If finances improve enough, the IRS can move the case back into active collection.

What happens if the taxpayer falls behind again while in CNC status?

Staying compliant with all future filing and payment obligations is a requirement of keeping CNC status. Falling behind on a new year’s taxes can put the account back into active collection and add to the total owed. PFGTAX advises clients in CNC to treat ongoing compliance as part of the deal, not an afterthought.

Every case is different. Outcomes depend on a taxpayer’s specific financial situation, and PFGTAX does not guarantee any particular result or reduction in tax debt.