Hardship Closing Codes 24 Through 32: The Number That Decides When CNC Ends

When the IRS closes your account as Currently Not Collectible for hardship, it does not just flip a switch. It assigns a closing code between 24 and 32. That code is effectively a tripwire. If your income later rises past the amount tied to your code, the IRS computer can pull your account back into active collection. Knowing your code tells you where the tripwire is.

The values

The closing code values appear in Exhibit 5.16.1-2 of the Internal Revenue Manual, and the same table appears in the campus procedures at IRM 5.19.17.2.4:

The codes step up in $8,000 increments. They are annual figures.

How the IRS picks your code

The code is based on your allowed living expenses, not your income. IRM 5.16.1.2.9 says to "Use the hardship closing code that most closely corresponds to the taxpayer's total living expenses allowed," and gives the formula:

Monthly living expenses allowed x 12 (months) = Annual living expense amount. Select the hardship closing code with the closest dollar amount above the annual living expense amount.

The campus version in IRM 5.19.17.2.4 gives an example: allowable expenses of $3,400 a month times 12 is $40,800. "Closing Code 27 is the next highest cc to the taxpayer's allowable expense of $40,800." It adds a reminder that the taxpayer's monthly tax withholding, federal, state and local, "should be included within the calculation process."

The field IRM points employees to the total living expenses figure on Form 433-A. It cites the Rev. 5-2020 form's line 49. On the current Form 433-A (Rev. 6-2026), total living expenses are on line 50, with the IRS's allowable amounts in the "IRS USE ONLY" column beside it.

The rules around the choice

IRM 5.16.1.2.9 sets several guardrails:

• "Generally, do not select a code below the taxpayer's total living expenses allowed."
• "Do not use a higher code simply to prevent re-issuance of the account."
• If the chosen code does not match allowed expenses, the employee must document the reason in the summarizing statement.

And there is a note about narrow margins. If the closest code is only $300 above the annual living expense amount, the next higher code would be selected, with the history documenting that an increase in income of only $300 above allowed expenses "would not enable the taxpayer to make monthly payments." The IRS recognizes that a code set too tight would trigger reactivation on a raise too small to fund any payment.

Why the code matters

IRM 5.16.1.2.9 explains the mechanism: "The systemic process for reactivating hardship CNC accounts relies on an increase in TPI above a predetermined amount based on the hardship closing code when the case is closed as CNC." TPI is total positive income. "The TPI is reviewed annually when a taxpayer files an income tax return."

The IRM's own example in IRM 5.16.1.6: allowable expenses of $22,000 a year. The account is reported CNC using closing code 25. No mandatory follow-up is requested. "The account will be reissued systemically when the taxpayer files a return with income of $28,000.00 or more."

So your closing code value is, in practical terms, the income at which the IRS computer starts asking questions again.

A worked example with 2026 standards

A single taxpayer in Hillsborough County has no car and lives on $2,200 a month. Using the June 29, 2026 standards, her allowable expenses might include the $867 National Standard, $90 out-of-pocket health care, the $220 public transportation allowance, her actual rent and utilities of $1,600 (below the $2,073 county standard), a $210 health insurance premium, and modest tax withholding. Suppose the allowed total is $3,050 a month.

Annualized, that is $36,600. The closest code above $36,600 is code 27, at $44,000. Her account would be reported CNC under code 27. Unless something else changes, her account should not systemically reactivate until a filed return shows total positive income of $44,000 or more.

If her allowed expenses had come to $35,800 a year instead, code 26 at $36,000 would be only $200 above. Under the $300 note, the next higher code, 27, would be selected.

Special uses of specific codes

Code 24 shows up in several places. CNC exception processing, for small balances where the taxpayer has a terminal illness, is incarcerated, lives only on Social Security, welfare or unemployment, or is unemployed with no income, uses closing code 24 under IRM 5.19.17.2.4.1. The field IRM's incarceration example in IRM 5.16.1.6 also reports the account under code 24.

Code 32 has a special use too. IRM 5.16.1.2.9 says that when a taxpayer cannot full pay a restitution based assessment and an installment agreement is set up for the related civil assessments without it, the restitution modules may be closed as CNC hardship using code 32.

Business accounts on a personal code

For sole proprietorships, partnerships with a personally liable general partner, and owner-liable LLCs, the TPI test runs on the individual's income. IRM 5.16.1.2.9 requires the Social Security number of the individual, general partner or member to be cross-referenced so the systemic check can work.

The IRM also flags a gap. In IRM 5.16.1.6, if a couple files jointly under one spouse's SSN and the other spouse owes on a sole proprietorship reported uncollectible, the reactivation check on the owing spouse's SSN "would not reactivate." That is one of the situations where the IRM tells employees to consider a manual follow-up instead.

Why your allowed expenses deserve a second look

Because the code is built from allowed expenses, every dollar of expense that the IRS allows raises the annual figure, and can move you up a code. That is one more reason to get the financial statement right before you submit it. A missed child care expense, a medical deviation never requested, or current year tax withholding left off the form all lower your allowed expenses, and with them, your reactivation threshold.

Consider the effect of $250 a month in legitimate expenses that never made it onto the form. That is $3,000 a year. For a taxpayer whose allowed expenses land just under a code boundary, $3,000 can mean the difference between code 26 at $36,000 and code 27 at $44,000. That is $8,000 more of annual income before the systemic check flags the account.

Do not inflate anything. The regulation requires good faith. But do not leave legitimate expenses on the table either.

How to find your code

The closing code is part of your IRS account record. The CNC transaction itself, transaction code 530, posts to your account, and a representative with a power of attorney can work with the IRS to confirm the closing code that was used. If you are in CNC and do not know your code, find out. It is the most useful number you can have when planning a job change, a raise, or a return to work.

What to do with the information

Knowing your code does not mean you should keep your income below it. You should earn what you can. It means you should not be surprised. If a new job will push your income past the code value, plan for the IRS to reopen the case, and plan what you will propose when it does, whether that is an installment agreement, an offer, or a new financial statement showing that your expenses also went up.

Two digits on a screen. Learn yours before the IRS uses them.