Steps to Declare Financial Hardship with the IRS

Can't Pay? Don't pay! If there is no feasible way to pay your IRS Tax Debt, you can declare Financial Hardship to stop their fierce collections efforts. Although this is usually a temporary reprieve, it is still a valuable tool for taxpayers in desperate situations.

Currently Not Collectible (CNC)
The IRS cannot force you to pay if doing so would force you to go without necessary living expenses. If you cannot pay the full balance or pay the IRS through an Installment Agreement without sacrificing basic needs, the IRS is required to report the account as “Currently Not Collectible” (CNC). Basic Needs Include:

• Rent/Mortgage Payments
• Food Expenses
• Utilities
• Gas/Transportation
• Medical Bills/Expenses
• Basic Clothing

Who Qualifies for Currently Not Collectible Status (CNC)?
According to a Report issued by the IRS on January 6, 2009, IRS employees will have greater authority to suspend collection actions in certain hardship cases where taxpayers are unable to pay. This includes:

• Taxpayers that have recently become unemployed
• Taxpayers that rely on Social Security or Welfare Income
• Taxpayers facing devastating illness or significant medical bills

Applying for Currently Not Collectible (CNC) Status
The IRS needs ample proof that you are unable to pay your Tax Debt before they will change your account status to Currently Not Collectible. Here’s what the IRS will request:

• Completion of Form 433F, Collection Information Statement
• Additional documentation, such as receipts, past due bills, and bank statements
• Up-to-date Tax Filings

All contact from the IRS will cease while they determine if you qualify for Currently Not Collectible Status.

Temporary Reprieve
Currently Not Collectible status is not a permanent solution for solving your Tax Debt. Your case will be reactivated if there are any indications that your financial situation has improved. For example, the IRS collected over $400 million from cases in Currently Not Collectible Status in 2006 alone.

Case Denied

Despite the IRS’s recent claims to ease the burden on the Taxpayer, collection efforts have increased. This means it will be harder to be approved for Currently Not Collectible status unless you display exceptional need. Consider working with a qualified professional to increase your chances of getting your case approved.