• Skip to content
  • Skip to primary sidebar
  • Skip to footer

Long Island Tax Resolution Services

  • Home
  • About
  • Blog
  • Free Consultation
  • Testimonials
  • En Español
  • Representation
  • Notices
  • Wage Garnishment
  • Back Taxes Help
  • Unfiled Returns
  • Levy
  • .
  • .
  • Call us at: 631-244-1650
You are here: Home / IRS TAX RELIEF / Currently Not Collectible / How To Qualify for IRS Hardship Status?

January 21, 2011 by James Grennen

How To Qualify for IRS Hardship Status?

The taxpayer can seek “Hardship Status” when their financial condition leaves them with no money available for delinquent taxes. “Hardship Status” has an alternate name: “Currently Not Collectible”. Hardship status can delay IRS collection action for up to 18 to 24 months or longer. Interest and penalties will continue to accrue. The taxpayer should use this period to organize their finances.

Hardship status must be the result of special circumstances causing the taxpayer’s personal life to be in chaos. The IRS is expert at discovering a taxpayer’s capacity to pay taxes owed. The taxpayer’s financial condition must at a point where household expenses aren’t met. The IRS has strict guidelines as to what makes up household expenses. Examples of “special circumstances” that can lead to financial hardship and support a “Hardship Status” classification include:

  • Divorce, separation and spousal issues. Examples of issues related to the spouse are: forgery, abandonment and tax problems.
  • Pregnancy, child rearing and special education needs. These issues will often need a spouse to stop working.
  • Number of dependents. As the number of household dependents increases the family income becomes more strained.
  • Death in the family. This event can cause loss of income, added expenses and issues like stress.
  • Physical and psychological disabilities and other health issues. These issues can reduce income, increase expenses and increse time commitments.
  • Addictions. Alchohol, drug and gambling addictions can lead to disruptions in family finances and tax compliance. The IRS wants taxpayers to support all claims.
  • Advanced age. This special circumstance can cause declining income, higher living expenses and forgetfulness.
  • Employment problems. The loss of a job, industry recession, a spouse working away from home and time spent looking for a new job can all cause financial hardship.
  • Retirement. Retirement of a taxpayer, a spouse, a parent or any other income contributor can stress the family finances.
  • Other financial problems like casualty loss (fire, accident, flood, storm etc.), stock market losses, increased mortgage payments, business losses, bankruptcy, imprisonment, military service and child or spousal support needs.

It is a good idea to get the help of an expert to do some financial planning before seeking hardship status. A tax problem specialist is familiar with how the IRS will calculate your true capacity to pay. By doing this the taxpayer can avoid wasting time applying for a hardship status that they wouldn’t qualify for.

Owning significant liquid assets such as bank, money market or brokerage accounts, or a cash value life insurance policy can easily disqualify the taxpayer from hardship status.

Even if you qualify for hardship status, it is not permanent and may last up to 24 months before the IRS reevaluates your status. The taxpayer will have to present financial disclosure forms to the IRS periodically.

To keep hardship status, the taxpayer must remain in “current compliance” with IRS requirements. All tax returns must be filed, payroll withholding must be enough and estimated payments must be current.


Filed Under: Currently Not Collectible Tagged With: IRS Hardship

Learn About Us

  • About Us
  • Enrolled Agents
  • Groups and Associations
  • Our Tax Resolution Process
  • Seven Reasons to Hire Us

About James Grennen

James Grennen is a Certified Tax Resolution Specialist who is expert in solving IRS tax problems and New York State tax problems. He has decades of financial tax experience in addition to being an IRS Enrolled Agent.

Reader Interactions

Primary Sidebar

Search Form

DOWNLOAD A FREE COPY OF THE ESSENTIAL TAX RESOLUTION GUIDE

Cover of the Guide

Your information is safe with us.

Attorney Plus Program

Long Island Tax Resolution Services is Not a Law Firm of Attorney Practice


Please click here to see why our Attorney Plus Program is the smartest way to resolve your IRS or State tax problems.

Be Smart Check List

IRS On Enrolled Agents :

"The Enrolled Agent is the most expansive license that the IRS grants a tax professional.

An Enrolled Agent has earned the privilege of representing taxpayers before the IRS.

Enrolled Agents are generally unrestricted as to which taxpayers they can represent, what types of tax matters they can handle and the IRS offices before which they can practice."


IRS Publication 4693A
(A Guide to the Enrolled Agent Program)

Man trapped by tax

NYS Tax Warrants: What Every Taxpayer Needs to Know

Man thinking. New York State Tax Problems FAQ

10 Frequently Asked Questions about New York State Tax Problems

Top 4 NY State Department of Taxation Collection Actions

Top 4 NY State Department of Taxation Collection Actions and What to Do About Them

Offer In Compromise (OIC): Tips To Getting Yours Accepted

The Penalties for Failing to File a Return or Pay Taxes

Footer

LITRS Company Profile

Long Island Tax Resolution Services specializes in providing affordable solutions to both individuals and small businesses experiencing back tax problems. These are either IRS tax problems or State tax problems.

Resources

Our Process

Privacy Policy

Recent Posts

  • NYS Tax Warrants: What Every Taxpayer Needs to Know
  • 10 Frequently Asked Questions about New York State Tax Problems
  • Top 4 NY State Department of Taxation Collection Actions and What to Do About Them
  • Offer In Compromise (OIC): Tips To Getting Yours Accepted
  • The Penalties for Failing to File a Return or Pay Taxes

Tags

Innocent Spouse Relief IRS Back Taxes IRS Bank Levy IRS Hardship irs notices IRS Offer IRS Penalties IRS Plans IRS Tax Relief IRS Tax Services IRS Wage Garnishment Tax Debts Tax Returns

Locations

Head Office (map above)
    80 Orville Drive, Suite 100Bohemia, NY 11716
    Phone: (631) 244-1650
    Fax: (720) 294-1650
Manhattan Location
    5 Penn Plaza, 23rd FloorNew York, NY 10001
2nd Long Island Location
    626 Rexcorp PlazaWest Tower, 6th FloorUniondale, NY 11556
Westchester Location
    50 Main St, 10th FloorWhite Plains, NY 10606

© Copyright 2014 - 2017 Long Island Tax Resolution Services · All Logos & Trademark Belongs To Their Respective Owners·