If you have a financial hardship that prevents you from paying your tax debt, you may qualify for an IRS financial hardship plan. Sometimes, these IRS financial hardship programs can actually result in you paying nothing toward your tax debt! Our tax attorneys can review your situation with you to determine if you’d be eligible for any of these programs.
Can I file a hardship with the IRS?
In order to request a financial hardship program with the IRS, we must generally show that you are not able to pay your tax debt while maintaining a minimal standard of living for yourself and your family. Whether a hardship applies can be different from person to person since everyone’s situation is different.
If you cannot afford to pay your tax debt, you should contact us immediately. While sometimes an IRS financial hardship plan is the best strategy, other times, we may want to simply settle your tax debt. If you have a financial hardship, you may be able to settle your tax debt for pennies on the dollar.
Proving Hardship to the IRS: IRS Financial Hardship Form
Generally, if you are requesting an IRS financial hardship plan, you will need to complete IRS From 433-A or IRS Form 433-F. While it may seem simple, you should not allow the IRS to complete these forms for you and you should not attempt to complete them on your own without a tax attorney.
Because we complete these forms frequently, we know exactly how to complete them so you do not have issues being approved for an IRS financial hardship plan.
What does the IRS consider financial hardship?
Financial hardship, as defined by the IRS, occurs when paying your tax debt prevents you from meeting basic, reasonable living expenses.
The IRS has its own definition of “reasonable living expenses”. Those expenses are available here, but you should keep in mind that different rules apply for different IRS programs. Some IRS financial plans use only “actual expenses” that you incur. Others will use national IRS standards. Others will use regional standards.
Because it can be difficult to prove a financial hardship, you should hire a tax attorney to assist you if you are considering an IRS financial hardship plan.
What IRS financial hardship programs are available?
When we are discussing IRS financial hardship plans, we are generally talking about two different programs: the “partial pay installment agreement” and “currently not collectible” status.
We’ll discuss each of these IRS financial hardship programs below, but generally, these programs are only available if you cannot afford to pay your debt in full through an installment agreement (IRS payment plan). Because these financial hardship plans result in paying less than the full amount of your tax due, they are subject to a thorough financial review.
What is a Partial Pay Installment Agreement?
The first IRS financial hardship plan we’ll discuss is the Partial Pay Installment Agreement. Sometimes we will refer to this IRS financial hardship plan as a PPIA.
A Partial Pay Installment Agreement allows a taxpayer to pay less than the full amount of their tax debt. Generally, if you cannot afford payments under the Fresh Start program or the 84 Month Pilot Program, you may qualify for a partial pay installment agreement. However, you may be subject to thorough financial review.
You would undergo a financial review when you initially apply for the Partial Pay Installment Agreement but would also be reviewed periodically to determine if you’ve had a change in circumstances that would allow you to pay more. The IRS can increase your payments if you have an increase in income.
In a Partial Pay Installment Agreement, you generally pay less than the full amount of your tax debt, but still pay something toward your debt. A PPIA can sometimes be used in cases in which you do not qualify for an Offer in Compromise.
What is Currently Not Collectible Status?
The second IRS financial hardship plan we’ll discuss is “Currently Not Collectible” status. Sometimes, we refer to “Currently Not Collectible” status as CNC.
While a Partial Pay Installment Agreement can be used when you cannot afford to pay your entire tax debt, “Currently Not Collectible” status can be used when you cannot afford any of your tax debt.
In such a case, all collection activity by the IRS is stopped. To qualify, you must meet certain financial eligibility requirements set by the IRS. CNC does not permanently eliminate your tax debt. Rather, it simply establishes that the IRS cannot practically get any money from you. As a result, the IRS stops collection activity.
While you are in Currently Not Collectible status, the statute of limitations for the IRS to collect its past-due tax debt continues to run. In other words, you are running out the clock on the IRS’s time to collect the debt. If the debt remains noncollectable until the statute of limitations expires, the IRS cannot ever collect the tax debt.
CNC can be a powerful IRS financial hardship plan because it does not require any payments at all.
If you’re experiencing financial hardship, our tax attorneys can give you immediate relief from your tax problems
When you hire a tax attorney, the IRS is no longer permitted to speak with you. They are required by law to communicate directly with your attorney. No more calls. No more letters. Just relief. We have experience helping taxpayers like you eliminate hundreds of thousands of dollars in tax debt.
Better yet, in many cases, we can get a “collection hold” on your account the same day you hire us. This can stop an IRS levy, stop an IRS wage garnishment, or a stop a Federal Tax Lien from being filed.
If you’re looking at an IRS financial hardship plan, you shouldn’t take on the IRS without a tax attorney.
Where can I get more information about IRS financial hardship plans?
If you’re looking for more information about IRS financial hardship plans, you can request a free copy of our book, The Essential Tax Resolution Survival Guide. As part of the ARM Yourself With Knowledge series, this guide aims to help you navigate the tax resolution process and what happens afterward.
Contact us for a free consultation with a tax attorney
Take back control of your financial future. If you cannot afford to repay your tax, you may qualify for an IRS financial hardship plan. Providing both immediate relief and long-term solutions, tax resolution could be the answer you have been looking for. Our attorneys strive to make this process as easy as possible by offering flexible payment options and financing.
Contact our law office today to schedule a free consultation! Call or reach out to your closest office:
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The best part is that we can start the whole process over the phone or by video conference so you don’t even need to come into the office! We make everything as easy as possible for you from start to finish. Call us today.