The CP71C is the annual balance reminder for accounts in Currently Not Collectible status. The IRS determined you can't afford to pay, so active collection is suspended. But the debt still exists, interest still accrues, and the IRS checks in once a year with the CP71C.
What CNC Means for You
No levies. No garnishments. No Revenue Officers showing up at your door. The IRS has effectively shelved your case. But the balance keeps growing because the failure-to-pay penalty (0.5% per month) and interest continue to accrue. A $30,000 balance in CNC can grow to $40,000 over a few years without any collection activity.
CNC Is Not Permanent
The IRS reviews CNC accounts periodically. If your income increases significantly (through a raise, new job, inheritance, or other windfall), the IRS can remove you from CNC status and resume collection. The CP71C doesn't trigger a review by itself, but the IRS runs periodic reviews using income data from your filed returns.
The CSED Is Your Friend
If your CSED is approaching, CNC status is working exactly as it should. You're riding out the collection period without paying. When the CSED expires, the debt disappears. Monitor your CSED carefully by reviewing your account transcripts annually.
When to Reconsider
If your financial situation has improved enough to make payments, consider proactively setting up a small installment agreement. This demonstrates good faith and can position you favorably if the IRS reviews your CNC status. It also reduces the total balance (slowly) rather than letting it grow.
If you're in CNC and want to verify your CSED or evaluate other options, call us at (813) 229-7100.