CNC status is also known as hardship status.Hardship status is determined if the taxpayer is unable to pay basic living expenses.Basic living expenses are housing, utility, food, clothing, health & transportation expenses mainly the expenditures necessary for basic daily living and maintaining good health. Based on this information submitted to the IRS on Form 433F & Form 433ACollection Information Statement for Wage Earners and Self-Employed Individuals, the IRS makes a determination if the account is eligible for the CNC status. 

If the IRS determines based on the information provided on Form 433F or Form 433A , that there is considerable cash flow after taking into account basic living expenses of the taxpayer the CNC is not approved . On the other hand after accounting for all basic living expenses of the taxpayer there is minimal cash flow left for the satisfying the tax liability the CNC can get approved. All sources of income are accounted for such as :

• Earnings
• Distributions
• Interest & Dividend Income
• Schedule C Income
• Schedule F Income
• All kinds of Property & Investment Income

If there is positive cash flow then total positive income is then compared against both national & local standards which is divided into following groups

National Standards – Food , Clothing & Other Items

National Standards have been established for five necessary expenses: food, housekeeping supplies, apparel and services, personal care products and services, and miscellaneous expenses. For instance : current national standards deduction is $727 for an individual  & upto $1786 for a family of four, for each additional person an additional deduction of $420 is allowed. For more information click here

National Standards – Out Of Pocket Healthcare Expenses

Out-of-Pocket Health Care standards have been established for out-of-pocket health care expenses including medical services, prescription drugs, and medical supplies (e.g. eyeglasses, contact lenses, etc.) . For instance : out-of-pocket health care standard amount is allowed in addition to the amount taxpayers pay for health insurance for under the age 65 is $55 and over 65 is $114. For more information click here

Local Standards – Housing & Utilities

Housing and utilities standards include mortgage or rent, property taxes, interest, insurance, maintenance, repairs, gas, electric, water, heating oil, garbage collection, residential telephone service, cell phone service, cable television, and Internet service. These expenses can vary from state to state according to the IRS .

Local Standards – Transportation 

The transportation standards for taxpayers with a vehicle consist of two parts: nationwide figures for monthly loan or lease payments referred to as ownership costs, and additional amounts for monthly operating costs. The operating costs include maintenance, repairs, insurance, fuel, registrations, licenses, inspections, parking and tolls (These standard amounts do not include personal property taxes). For more information click here.