How the IRS Tax Relief Hardship Program Can Help You

BJ Lynch
Expert Contributor
Last Updated:
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  • Solvable provides you with a wealth of tax knowledge and a place to connect with the most reputable tax professionals.
  • The Internal Revenue Service (IRS) can be challenging to negotiate with, but there are options available to you that can help when you are caught up in tax controversy.
  • Take up the habit of keeping your taxes in check, so you won’t have to face the consequences that come with delinquent tax debts.

Whether or not you file taxes as an individual, a small business owner, or a corporation, the basic concepts are the same. You should always take the time throughout the year to ensure that you have made the necessary arrangements for tax season. This means setting aside an estimated amount to cover taxes owed. You quite literally can not afford to procrastinate in being prepared to pay any taxes you may owe when it’s time to file your taxes.

The IRS does not play around with those who let their tax debts become delinquent. The IRS has demonstrated this time and again as they have taken action against countless taxpayers, no matter what their filing status may have been, to collect on what they were owed. If you find that you are in the midst of a conflict with the IRS, don’t fret, there is still hope of being able to salvage the situation. When your tax debt is causing undue stress and hardship on your finances, a federal IRS tax relief hardship program might be just what you need.

What Exactly Is an IRS Hardship Program and How Does One Qualify?

Tax lingo can leave someone that’s not trained in the intricacies of tax law scratching their head and trying to comprehend what they just read. The type of language used by the IRS when explaining their rules and regulations is very intentional and is better understood when you seek out professional help with the services offered at Solvable. The IRS hardship program can be found buried in Section 1 of Chapter 16 within Part 5 of the Internal Revenue Manual (IRM).

This section of the IRM outlines a provision for what is defined as a Currently Not Collectable (CNC) status. Stringent qualifications help the IRS determine your eligibility when it comes to their hardship program. For starters, the IRS will have to review your predicament to ascertain if collecting the taxes you are liable for would cause an undue hardship which in turn would disrupt the living expenses necessary for you to survive.

The information that the IRS will need to make such a decision is obtained from the following Collection Information Statement forms:

How the IRS Tax Relief Hardship Program Can Help You
  • Form 433-A and form 433-F. Both are used for collecting information from individuals that are self-employed or that earn wages.
  • Form 433-B, used for collecting information from businesses.

The information that these forms collect is as follows:

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  • Everything that you own:
    • Bank accounts.
    • Investment portfolios.
    • Retirement savings.
    • Vehicles.
    • Real estate.
    • Life insurance.
    • Other assets that the IRS has deemed to have significant value and can be used towards your tax debt.
  • The individual market value for each of your assets.
  • Your earnings statements for the last three months.
  • A statement outlining your spending over the last three months.
  • A report of a three-month average of your income and expenses that are broken into categories.

The information that the IRS acquires from these Collection Information Statements is sensitive in nature. They require you to disclose financial information that some may see as being too intrusive. One determining factor when looking to qualify for an IRS hardship program is that you only have the means to support your family and to just barely scrape by. After you have decided to provide the information and to continue the process of trying to be approved for an IRS hardship program, the qualifications are as follows:

  • Your income per year is less than $84,000.
  • Once you have paid for your necessary living expenses, you have little to no money left.
  • Your living expenses are considered to be within IRS guidelines:
    • The IRS outlines allowable living expenses as collection financial standards and is broken into four categories:
      • Personal care products, Food, Clothing, and miscellaneous items.
      • Health care expenses that are out-of-pocket.
      • Housing and associated utilities.
      • Transportation.

The CNC status typically doesn’t apply to large corporations and bankruptcy may be a better option for corporations with delinquent taxes. Instead, the CNC status applies to:

  • Individuals.
  • Sole proprietorships.
  • Partnerships that have a general partner who is personally liable.
  • LLCs that are individually owned and that individual is identifiable as liable for the taxes.

Other Options for Settling Tax Debt With the IRS

If you feel that the requirements to qualify for an IRS hardship program go beyond what you are willing to disclose to the IRS, there are other options available for resolving tax debt with the IRS. The following might serve as a better route for you to pursue:

  • An IRS Payment Plan or installment agreement:
    • This is a plan of repayment that varies depending on the type of installment agreement you choose and ultimately hinges on if the IRS approves for you to pay your tax debt using this method.
  • An IRS Offer in Compromise (OIC):
    • This option can prove challenging to get approved by the IRS but is not impossible. Basically, an OIC is when the IRS allows for your tax debt to be settled for significantly less than you owe.

No matter the option you choose when working to balance between supporting your family and paying the debt you owe to the IRS, it will be better to take action than to do nothing. The IRS is remarkably unforgiving when it comes down to delinquent taxes and can be relentless in their collection efforts. Don’t hesitate to find the help of a tax professional when facing the impossible odds of tax debt with the IRS. Solvable’s services can connect you with vetted tax professionals ready to work on your behalf to settle any tax issues you need to be resolved.

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BJ Lynch
Expert Contributor
Last Updated: