Washington Apparel Company Gets IRS Collection Paused With Currently Not Collectible Status
A custom apparel company in Washington owed the IRS on its business account and did not have the cash flow to make payments without putting the business at risk. We got the IRS to place the account into Currently Not Collectible status, which pauses active collection. The pressure stopped, and the owner could focus on running the company instead of bracing for the next IRS action. Here is how it worked.
How it started
The business prints and sells custom apparel, the kind of company where revenue swings with the season and a few big orders can make or break a quarter. Like a lot of small businesses, it had fallen behind with the IRS, and the balance was more than the company could pay off on a normal monthly schedule without starving the operations that actually bring money in.
That is the bind so many owners are in. The IRS wants a payment plan that clears the debt over time, but the math does not work. If every spare dollar goes to the IRS, there is nothing left to buy materials, make payroll, or keep the lights on. And once you tell the IRS you cannot pay, the worry is that they will simply take it through a levy.
What Currently Not Collectible means
Currently Not Collectible, often shortened to CNC, is a status the IRS uses when it agrees that a taxpayer cannot pay right now without serious hardship. While the account is in CNC, the IRS stops active collection. It does not levy the bank account, it does not garnish, and it does not demand monthly payments.
A few things are worth being clear about, because CNC is not a magic eraser. The debt does not go away. Interest and penalties generally keep adding up. The IRS will still keep any tax refunds and apply them to the balance, and it sends an annual reminder of what is owed. The IRS can also review the status later and restart collection if the business recovers and can afford to pay. What CNC does is buy real breathing room, and in some cases the collection statute runs out before the IRS ever resumes collection.
What we did
To get a business into CNC, you have to prove it. The IRS does not take your word that money is tight. We pulled together the company’s financial picture, income, operating expenses, and what was genuinely left over, and showed the IRS that requiring monthly payments would keep the business from meeting its basic operating costs.
We also handled the account so the IRS had a reason to hold off while we made the case, and we kept the business current on its ongoing filings and deposits. That compliance piece is not optional. The IRS will not grant or keep a taxpayer in CNC if they are still falling further behind, so staying current is part of the deal.
The outcome
The IRS approved Currently Not Collectible status on the business account. In plain terms, the collection case was temporarily closed. No payments are required while the status holds, the levy threat is off the table for now, and the owner got back the ability to plan around the business instead of around the IRS.
We made sure the owner understood the conditions that keep the status in place: stay current on all filings, pay any new taxes that come due on time, and expect the annual reminder notice and the offset of any refunds. As long as those conditions hold, the account stays paused.
Why it matters
CNC is one of the most useful and least understood tools in tax resolution. Owners often think their only options are to somehow find money they do not have or to ignore the IRS and hope for the best. There is a real, legitimate middle path: if you genuinely cannot pay without hardship, the IRS has a status built for exactly that, and it can stop collection in its tracks.
It is not the right answer for everyone. For a taxpayer who can afford a modest payment, an installment agreement may be better. For one whose finances support it, an offer in compromise might settle the debt outright. CNC fits the specific case where paying now would do real damage, and the only way to know if it fits is to look honestly at the numbers.
If your business is behind with the IRS and you are choosing between payments you cannot afford and waiting for a levy, there may be a better option than either.
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.