IRS Hardship Rules

The economy is not doing well, although the government would like you to think otherwise. Many people are still finding it hard to make ends meet, especially with the recent payroll tax hike. This has brought about a snowball effect on many taxpayers resulting in difficulty paying their taxes. If you are one of those currently struggling with tax debts, you need to do something about it.

My advice is for you to try to prove to the IRS that you are undergoing hardship. To apply to be considered under the hardship status, you have to fill up IRS Form 433A. The process involves disclosing your total monthly costs for a wide range of expenses such as food and clothing, transport, utility expenses, mortgage or rental expenses, home supplies, personal products etc. All the relevant information on your spending records will be declared as you fill up Form 433A. The IRS will then review the form and decide whether you are eligible for hardship status.

Needless to say, qualification for hardship status is not easy and only a small proportion of those who apply for it are successful. But if you know the IRS hardship rules, it will increase your chance qualifying.

The first rule that the IRS applies to ascertain if you are eligible for hardship status is the amount you spend for basic items like food, clothing and personal items should be below the national average. This average is set by the IRS and its amount is not generally known.
The second rule has to do with your assets. You should not have any assets that can be liquidated to pay for your tax debts. If you do then obviously you should be selling your assets to pay your back taxes rather than applying for hardship status.
And finally, the IRS would want to see concrete evidence that you are facing severe financial hardship.

Although it is tough to achieve hardship status, but if you do get it, your back taxes will be classified as “not collectible”. If you are desirous of applying for hardship status, you can greatly increase your chances of success by consulting a tax attorney who can help you navigate through the process from filling up IRS Form 433A to negotiating with the IRS on your behalf.
If you wish to discuss this matter further, call us at (813) 229 7100 for a free consultation.

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