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Prove Financial Hardship

If you truly cannot afford to pay your IRS tax bill, you may qualify for hardship status. Basically, a financial hardship is a situation that forces you to decide between meeting your basic living expenses or paying your tax debt. To prove financial hardship, the IRS requires detailed information about your income and expenses.

Prove Financial Hardship

If you truly cannot afford to pay your IRS tax bill, you may qualify for hardship status. Basically, a financial hardship is a situation that forces you to decide between meeting your basic living expenses or paying your tax debt. To prove financial hardship, the IRS requires detailed information about your income and expenses.


Proving Financial Hardship Means Having All Your Ducks in a Row.

A Tax Levy Means the IRS Can Seize Property or Other Assets to Cover Your Outstanding Tax Bill. The Tax Problem Solver Team Can Help!

Financial hardship is highly subjective as a descriptive term of one’s financial situation. You and the IRS certainly view the phrase from different perspectives, but the IRS does define the phrase very specifically. Understanding the criteria and documentation required to substantiate a hardship situation is vital when dealing with the government.

How the IRS Defines Financial Hardship
The IRS considers an economic hardship the inability to pay reasonable and necessary living expenses. The IRS determines what expenses qualify as basic expenses, which will vary depending on your circumstances. Generally, basic expenses include your rent or mortgage, utilities, food, transportation, and health care. And by the way, the IRS states that qualifying circumstances do not include a luxurious standard of living and credit card payments are usually not allowed. A qualified tax attorney can help you navigate this often complex array of document collection, form requirements and background information.

Do you Qualify for uncollectible status? 
The best outcome you can hope for is to achieve “uncollectible” status from the IRS. To be declared uncollectible by the IRS or currently not collectible (CNC), you will have to prove to the them that if they were to collect taxes owed, it would create an unfair economic hardship. Depending on the amount of your tax debt, the IRS is likely to ask you to detail your financial situation before placing your account on a CNC status.
Although basic information is enough to substantiate your situation with some creditors, the government requires additional documentation.
This may include:

  • Mortgage loan documents or your lease agreement
  • Copies of bills for monthly expenses such as utilities, telephone, transportation, insurance, and child care
  • A copy of the court order for child support or spousal support payments
  • Copies of hospital and doctor bills


The Tax Problem Solver Team can help you organize copies of documents that support your expenses, income, assets, and liabilities. Because just a small percentage of people can qualify for financial hardship relief, having this information properly organized and prepared for how the IRS reviews your submission can increase the probability of being approved as a financial hardship case.

We’re Here to Help!
Larry Heinkel and the Tax Problem Solver tax professionals can be of great benefit in helping you avoid potential pitfalls by assisting in completing all the correct forms and identifying all allowable expenses. With Larry and his 35 plus years of experience on your side, you can be assured of pursuing the best possible solution for your particular situation.

Your best bet is to get a free consultation with the Tax Problem Solver team and put their vast knowledge of how the IRS works to work for you!

Don’t Ignore the IRS – Things Get Bad Quickly!

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