How Do I File a Financial Hardship With the IRS?
Did you know that there’s an IRS program that could get those collection agents off your back for as long as you need to get back on your feet? Would you believe us if we said that there wasn’t even a charge involved?
At Success Tax Relief, we’re often asked whether there’s any program that would apply to people across the board like this. Fortunately, there is. Taxpayers who are truly in need can file a financial hardship with the IRS and have a temporary forbearance placed on your account.
As with everything related to federal taxes, however, you’ll need to prove a few things before the IRS will be willing to flat out grant you the kind of relief you’re looking for.
Who Qualifies for a Hardship?
Only people who genuinely cannot afford to pay their tax bill could ever truly qualify for hardship status. An overwhelming majority of those who apply for this coveted status get rejected rather easily because they didn’t meet a certain standard. The IRS has a tendency to have very specific requirements when it comes to granting an individual taxpayer the right to file as currently not collectible (CNC), which is also known as status 53.
Keep in mind that this is essentially more of a stay on collection than a complete absolution. You’ll probably have to pay the bill at some point in the future. However, the IRS doesn’t come after you even if they do require certain interest payments and penalties to continue to accumulate somewhere in the background.
Those who are already working with a representative from the IRS can request that the organization mark the status 53 block on their form. This means that a collector has filed Form 53 (Report of Currently Not Collectible Taxes) and given at least a cursory level of approval so far. Unfortunately, this form is always filed internally.
Earning the Status 53 Filing Status
That means you’ll be on the hook to file a few documents yourself in most cases. IRS agents could ask that you fill out Form 433-A, 433-B or 433-F to show that you really do have a legitimate hardship. In general, this requires the following to be true:
- Your annual income has dropped below $84,000 or so
- After you pay your basic living expenses you have little left over
- All of your living expenses fall within generally accepted IRS guidelines
While that might seem rather broad, the IRS really does set very specific standards as to what defines appropriate living expenses. If something isn’t on the following list, then IRS agents are unlikely to consider it legitimate:
- Food & Clothing
- Household supplies like detergent
- Personal care products including shampoo and toothpaste
- Hardware needed to maintain your property
- Necessary utility bills
Note that the IRS may not have exactly the same idea about which utility bills are absolute necessities. Technically, communication is a requirement according to generally accepted practices. Auditors may not exactly take kindly to you claiming you have a hardship when you pay for an extremely expensive cellular plan, however. They might also ask you to drop your cable or satellite provider before they say you’re truly in need.
This is especially true if you’ve gone out of your way to get some sort of fancy deal!
In order to analyze your finances, you’ll want to tally up your total allowable living expenses and then take that sum and deduct it from your monthly income. IRS rules refer to the resulting number as a so-called net disposable income. That’s what the IRS expects you to pay toward your taxes.
Should this number be fairly close to zero you might be able to qualify for a hardship. You should be able to do so easily if you end up with a negative number!
Collectors who know your situation very well might be willing to help you out with this filing process. Otherwise, you’ll want to get on the horn right away and get in touch with tax relief professionals who know the drill.
Finding Relief When You Need it Most
Numerous taxpayers just like you have been helped by Success Tax Relief, so they have the practical knowledge needed to navigate the many complex hoops the IRS makes you jump through. Contact us today and we’ll review your case. We may be able to help you declare a hardship and temporarily stop collection or, perhaps, find a relief program that could help you reduce your overall tax burden.