IRS Hardship Status

Sometimes, taxpayers struggling with back taxes might not qualify for an Installment Agreement or an Offer in Compromise under the Fresh Start Initiative. If you’re in this shoe, all hope is not lost. If you’re unable to cope with mounting tax liabilities and your daily life is starting to suffer because of huge tax burdens, you can find reprieve with the IRS Hardship Status or Currently Not Collectible Status.

What Does the Currently Not Collectible Status Mean?

The Currently Not Collectible Status or Status 53 allows taxpayers in financial difficulties to put off paying their tax bills until they can afford to meet up with tax bills when their financial situation improves. This is why it is often referred to as the Hardship Status.

Keep in mind the Hardship Status is only a temporary tax solution to help you buy time. In many cases, the IRS will periodically review the accounts of taxpayers on the uncollectible status to determine if their financial status has improved

Here are some of the likely things that can happen if your IRS account is declared Currently Not Collectible:

  • Your income and assets will no longer be levied by the IRS. This means all collection actions against you will cease.
  • If you qualify for any tax refund, it may be applied toward clearing part of your Unpaid Taxes.
  • While your income and assets will not be levied, penalties and interests will continue to accrue on any federal Unpaid Taxes.
  • Regardless of your uncollectible status, the IRS may deem it necessary to file a Notice of Federal Tax Lien. Your ability to sell assets and your credit rating can be negatively affected if this happens.

The Benefit of the IRS Hardship Program

The major advantage to the IRS Hardship Status is the time it gives you to negotiate a better tax solution. You get a temporary stay of execution from any IRS collection actions.

However, you need to strictly comply with living expenses that demonstrate your inability to pay back taxes in order to maintain the uncollectible status.

Qualifying for the IRS Hardship Program

Many people apply for the uncollectible status but only a small percentage get approved. At USA Tax Settlement, we understand that clients seeking this tax reprieve are in dire financial spots and looking for the best tax solution for their situation.

For this reason, we give our clients the best advice regarding their qualification status and whether the Hardship Program is a good fit for them.

Thanks to our wealth of experience, we already know the ins and outs of what the IRS requires for this program. This means we can help you to fill out the necessary forms, detail the correct allowable expenses, and negotiate for favorable exceptions.

You may qualify for the IRS Currently Not Collectible Status if you meet the following conditions:

  • Earn less than $84,000 per year
  • If your living expenses fall into the IRS uncollectible status category
  • Demonstrate actual economic hardship by showing that your disposable income (after expenses) is insufficient to pay back taxes

Filing for the IRS Hardship Status

To help you process the IRS Hardship Status application, we need to collect the following information for onward submission to the IRS:

  • All assets and income sources (property, vehicles, bank account information, life insurance, investment portfolios, retirement savings, etc)
  • Recent three months income statements
  • Recent three months expense statements
  • Market value for all assets
  • Average income and expenses for three months (depending on the category)

USA Tax Settlement understands what struggling taxpayers want but most importantly, we advise our clients on the best tax reprieve solution based on the individual’s specific case.

While the IRS Hardship Status is a great option, it might not be suitable for everyone. You can trust our expertise to steer you toward a better tax solution if the Currently Not Collectible Status is not a good fit for you.

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