IRS Hardship Program: Eligibility and Program Details

As the tax filing date for 2023 approaches, you may be experiencing the burden of tax debts owed to the IRS, making it difficult to catch up and stay current with payments. If this is the case, it is important to know that you may be eligible for the IRS Hardship Program, which can offer some relief and take the weight off your shoulders. This program allows taxpayers experiencing financial hardship to pay off their tax debt through an installment agreement or an Offer in Compromise. To determine eligibility, the IRS will review the taxpayer's income, expenses, assets, and liabilities on a case-by-case basis. If you are struggling to pay off back taxes, the IRS Hardship Program may provide the assistance needed to get back on track with your payments.

Finishline Tax Solutions can help you navigate the process of applying for the IRS Hardship Program and getting the tax relief you need.

The IRS Hardship Program is a program that allows taxpayers to pay off their tax debts through an installment agreement or an Offer in Compromise (OIC) if they are experiencing financial hardship.

Taxpayers who are experiencing financial hardship and are unable to pay their tax debt in full may be eligible for the program. Eligibility is determined on a case-by-case basis, taking into consideration the taxpayer's income, expenses, assets, and liabilities.

An installment agreement is a payment plan that allows taxpayers to pay off their tax debt over time, rather than in one lump sum. The payment plan may last up to 72 months, and the taxpayer must make monthly payments.

An Offer in Compromise (OIC) is an agreement between the taxpayer and the IRS that settles the tax debt for less than the full amount owed. To qualify for an OIC, the taxpayer must demonstrate that they are unable to pay the full amount and that accepting the OIC is in the best interest of both the taxpayer and the government.

To apply for the IRS Hardship Program, taxpayers must complete Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, or Form 433-F, Collection Information Statement. These forms require detailed financial information about the taxpayer's income, expenses, assets, and liabilities. The forms can be submitted online or by mail.

If a taxpayer does not qualify for the IRS Hardship Program, they may still be able to arrange a payment plan with the IRS or explore other options, such as an Offer in Compromise or bankruptcy.

Yes, interest and penalties will continue to accrue while on the IRS Hardship Program. However, the IRS may waive or reduce penalties in some cases.

If a taxpayer defaults on their installment agreement while on the IRS Hardship Program, the IRS may take collection actions, such as filing a Notice of Federal Tax Lien or issuing a levy on the taxpayer's wages or bank account.

The IRS has 10 years from the date the tax was assessed to collect the tax debt. However, the collection period may be extended in certain cases, such as if the taxpayer enters into an installment agreement or an Offer in Compromise.

Yes, it is possible to qualify for the IRS hardship program more than once, but it will depend on your specific situation. If you have previously entered into an installment agreement or Offer in Compromise and are experiencing financial hardship again, you may be able to apply for the IRS hardship program again. However, the IRS will consider factors such as your payment history and current financial situation before approving your application. It's important to note that you must be current on all your tax filings and payments to be eligible for the program.

IRS Hardship Program: A possible relief if you owe back taxes to the IRS

Filing Back Taxes

The IRS Hardship program, also known as the Currently Not Collectible (CNC) status, is a program that allows taxpayers who are experiencing financial hardship to postpone paying their taxes. If you are approved for CNC status, the IRS will not take any collection action against you, such as garnishing your wages or seizing your assets, until your financial situation improves.

Potential benefits to the IRS Hardship program

  • Relief from collection action: As mentioned, if you are approved for CNC status, the IRS will not take any collection action against you. This can provide much-needed relief if you are struggling to pay your taxes and are being harassed by the IRS.
  • Time to pay: If you are approved for CNC status, you will have time to pay your taxes when your financial situation improves. This can be especially helpful if you are going through a temporary financial setback, such as a job loss or a medical emergency.
  • Interest and penalties may be reduced: If you are approved for CNC status, the IRS may agree to reduce or suspend the interest and penalties that have accumulated on your taxes. This can help to lower the overall amount that you owe.
  • Avoiding tax liens and levies: If you are approved for CNC status, the IRS will not file a tax lien or levy against you. A tax lien is a legal claim against your property to secure payment of your taxes, while a levy is the actual seizure of your property to satisfy your tax debt.

It's important to note that the IRS Hardship program is not a permanent solution. If your financial situation improves, you will be expected to resume paying your taxes. Additionally, the IRS may review your case periodically to ensure that you are still experiencing financial hardship.

How can I get approved for CNS status by the IRS

To apply for Currently Not Collectible (CNC) status with the IRS, you will need to provide financial information to demonstrate that you are unable to pay your taxes. You will also need to provide information about your income, expenses, and assets.

Here are the steps to apply for CNC status:

  1. Gather your financial information: You will need to provide detailed information about your income, expenses, and assets. This includes information about your employment, any business income or expenses, your monthly bills and expenses, and any assets you own, such as a home or car.
  2. Complete Form 433-F: This is the Collection Information Statement for Wage Earners and Self-Employed Individuals. This form is used by the IRS to gather information about your financial situation. You can download Form 433-F from the IRS website or request a copy by calling the IRS.
  3. Submit your financial information to the IRS: You can submit your financial information to the IRS by mail, fax, or online through the IRS's e-Services portal. Make sure to include a completed Form 433-F and any other supporting documentation.
  4. Wait for a response from the IRS: It may take several weeks or months for the IRS to review your financial information and make a decision on your CNC status. The IRS may also request additional information or documentation before making a decision.

If you are approved for CNC status, the IRS will send you a letter stating that your case has been placed in CNC status. If you are not approved, the IRS will continue to pursue collection action against you. If you disagree with the IRS's decision, you can appeal the decision through the IRS's appeals process.

Are there tax relief companies that I can seek help from to get CNS status approved?

Yes, there are companies that specialize in providing tax relief services to individuals and businesses who are struggling to pay their taxes. These companies may be able to help you apply for Currently Not Collectible (CNC) status with the IRS or negotiate a payment plan or offer in compromise.

It's important to be careful when choosing a tax relief company, as some companies may not be legitimate or may charge high fees for their services. Here are a few things to consider when choosing a tax relief company:

  1. Research the company: Check the company's reputation by reading online reviews and checking with the Better Business Bureau.
  2. Look for a company that is transparent about its fees: Choose a company that is upfront about its fees and does not require you to pay a large upfront fee.
  3. Make sure the company is legitimate: Avoid companies that make unrealistic promises or guarantee that they can reduce your tax debt.
  4. Make sure the company has access to tax experts, such as an enrolled agent or a tax attorney in-house.

It's generally a good idea to get a consultation before hiring a tax relief company. You may want to all the questions answered, to get advice on the best course of action for your situation.

What questions to ask before hiring a tax relief expert services

If you are considering hiring a tax relief expert, it's important to do your due diligence to ensure that you are working with a reputable and competent professional. Here are a few questions you may want to ask before hiring a tax relief expert:

  1. What is your background and experience in tax relief? Look for a professional who has relevant experience and credentials, such as an enrolled agent or a tax attorney.
  2. How do you charge for your services? Look for a professional who is upfront about their fees and does not require you to pay a large upfront fee.
  3. Can you provide references from past clients? Ask for references from past clients to get an idea of the professional's track record. Check testimonials online. These are from legitimate clients that have used the services from this company in the past.
  4. What is your success rate in negotiating with the IRS? Look for a professional who has a proven track record of successfully negotiating with the IRS.
  5. Do you have any specialties or areas of expertise? Consider hiring a professional who has specific expertise in your area of need, such as negotiating an offer in compromise or applying for Currently Not Collectible (CNC) status.
  6. What is your policy on communication and availability? Look for a professional who is responsive and available to answer your questions and provide updates on your case.
  7. What is your policy on confidentiality? Choose a professional who is committed to protecting your privacy and keeping your information confidential.

At FinishLine Tax solutions, our experts have been helping individuals with special tax situations nationwide and can help you with your tax problem. FinishLine ranked #1304 on Inc. Magazine's 2022 Inc. 5000, a prestigious list of the nation's fastest-growing private companies.

Everything You Need to Know About the IRS One Time Forgiveness Program

IRS One Time Forgiveness Program - Everything You Need to Know

When you owe the Internal Revenue Service (IRS), you may wonder whether there is a way to avoid accumulating penalties and fines. Besides that, you may want to invest but fear that your tax lien will damage your financial credibility.

Luckily, the IRS offers a One Time Forgiveness program to help people deal with tax liability. Using this initiative, you can evade the negative consequences of owing taxes. You may also get enough time to organize your finances and repay the debt without causing significant financial problems.

Read on to discover several things you need to know about the One Time Forgiveness program. We will also explain how you can determine the most suitable tax relief program based on your needs and financial status.

How Many Options Does the One Time Forgiveness Program Have?

The IRS offers several options under the IRS One Time Forgiveness program. These include Innocent Spouse Relief, Installment Agreements, and Currently Not Collectible. Innocent Spouse Relief allows you to avoid paying penalties, taxes, and interests if your current or former spouse provided wrong information when filing back taxes.

For instance, if they did not disclose some of their income sources, which led to a penalty, you may apply for relief. This initiative is applicable if the IRS can only collect the amount due from the spouse. Besides that, you can only qualify if:

  • The penalties are from self-employment taxes
  • You can prove you did not know about the inaccuracy
  • You and your spouse have not transferred money in a fraudulent scheme

Sometimes, your financial situation may make it very challenging to pay the taxes you owe. In such a case, you may apply for a Currently Not Collectible status. In case you qualify, the IRS will stop penalizing your debt and refrain from collection activities.

An Installment Agreement is a tax forgiveness program that allows you to repay your debts with a schedule. If you cannot remit the entire amount due to various issues and owe a debt of less than $50,000, you may benefit from the initiative.

Offer in Compromise (OIC) Tax Relief Option

OIC is a One Time Forgiveness relief program that is rarely offered compared to the other options. This initiative is an ideal choice if you can afford to repay some of your debt in a lump sum. Once you qualify, the IRS will forgive a significant portion of the total taxes and penalties due.

They will then provide a payment schedule allowing you to clear the remaining amount in installments. The payment period is usually a maximum of 72 months, whereby the IRS will require you to remit a specific figure without fail or delay for the entire period.

How Does One Time Forgiveness Work?

The One Time Forgiveness program you qualify for will mainly depend on your financial situation. However, determining the most suitable option may be challenging without professional help. It is advisable to consult with a tax resolution expert before applying for any relief program. By taking this step, you enhance the chances of qualifying and ensure you provide the IRS with correct information.

Once you apply for IRS One Time Forgiveness program, the IRS will assess your situation and evaluate eligibility. If they accept the application, they will provide a detailed repayment schedule.

Depending on the program you chose, you may send the amended debt in installments or lump sum. The IRS will also require you to remit all your taxes within the stipulated time moving forward. Other than that, they may perform periodic assessments on your financial status as needed.

Contact Tax Industry to Apply for Debt Relief

Each option in the IRS One Time Forgiveness program has several qualifications you must meet to be eligible. Unfortunately, gathering all the details you need to apply for this initiative may be frustrating if you do not have extensive knowledge about taxation.

At Tax Industry, we offer professional tax resolution services to help you deal with debt. Our experts can assess your situation to help you apply for the most suitable One Time Forgiveness option. Reach out to us today for reliable tax debt relief services. Due to the complex US tax systems, you may still have some questions about liability and relief programs. At Tax Industry, we have a team of experts specialized in resolution services.  With their help, you can debunk common tax myths and understand how to avoid getting into trouble with the IRS. They can also guide you in applying for relief programs to clear your debt and prevent consequences like wage garnishment. Reach out to us today to consult a tax expert.

Frequently Asked Questions About One Time Forgiveness Program


1. Does the IRS Have a Tax Forgiveness Program?

When owing the IRS, you are likely to wonder if it offers a tax forgiveness program. The short answer is yes, but it is important to note that having a debt is not a guarantee that you qualify for forgiveness. Before requesting tax relief, you should understand the options available. This way, you can determine which one you qualify for and know how to apply. The tax forgiveness programs offered by the IRS are an offer in compromise (OIC), innocent spouse relief, currently not collectible (CNC), and installment agreements. Each of these categories has specific requirements for eligibility. Consulting a tax professional is the best way to check if you qualify and increase the chances of the IRS considering your application.

2. When Can You Use IRS One Time Forgiveness?

If you cannot pay tax penalties due to circumstances beyond your control, you might qualify for IRS one-time forgiveness. One type of this debt relief program is a reasonable cause, available to those unable to meet their obligations due to health issues or an act of God like floods or fires. First-time penalty abatement is another one-time forgiveness program that allows the IRS to waive all fines and penalties you owe. The qualification requirements are:

  • No tax debts for the last three years
  • Filing all returns in time
  • Making prior arrangements to pay outstanding taxes

The final type of one-time forgiveness is a statutory exception. This relief program only applies if the IRS sends you an incorrect invoice after a tax debt caused by advice provided by their officials.

3. How Much Does the IRS Usually Settle For?

The value the IRS settles for will depend on the amount of debt. It also varies according to the type of tax relief program you use for repayment. For instance, if you select and qualify for an offer in compromise, you first need to pay a lump sum equal to 20% of your debt.

On the other hand, after an installment agreement, the IRS will ask how much you can afford to pay each month.  They may also request you to remit a specific amount monthly by dividing

4 . How Do I Ask for Forgiveness From the IRS?

When planning to settle your tax debt, you can call the IRS to talk to their personnel. Another option is to mail them a tax relief program application alongside the needed supporting documents. Since you must prove eligibility when requesting IRS one time tax forgiveness, it is always advisable to get professional help. With the guidance of a liability expert, you can file all past returns and submit the proper documents. Besides, it will be easier to negotiate favorable repayment terms.

5. Does IRS Forgive Debt After 10 Years?

The IRS can forgive debts that exceed ten years under certain circumstances. However, it is important to note that you may not qualify if you keep failing to pay your debt for subsequent years. This forgiveness duration can also be longer if you sign agreements and waivers that allow the IRS to extend it.


Five Reasons the IRS Abates Penalties

5 Reasons the IRS Abates Penalties | FinishLine Tax Solutions
Receiving a penalty from the IRS can be devastating, especially when you don’t have the means to repay it on time. A penalty makes it harder to clear your outstanding taxes since it attracts further penalties and interest until you repay the debt fully. However, it is possible to apply for and get relief/abatement from a tax penalty if you show that you made an effort to comply but could not do this because of circumstances you could not control. Once you get the notice of penalty, check all the details to ensure they are correct and see what you can resolve. You can receive penalty relief for the following tax issues:
  • Failure to pay outstanding taxes on time
  • Failure to file tax returns on time
  • Failure to deposit specific taxes according to requirements
  • Other applicable penalties from the above
After assessing the notice, you (or a tax relief specialists acting on your behalf) can submit a written request seeking penalty abatement. This article discusses the main reasons which IRS accepts for penalty abatement.

Reasonable Cause

If you have reasonable cause for not paying, filing or depositing on time, your application must demonstrate the reasons for the delay/non-payment. Some acceptable reasons include:
  • Travelling abroad/out of the country
  • Being incarcerated
  • Being seriously ill/dealing with the serious illness of a close family member
  • Death of an immediate family member
  • Destruction or theft leading to loss of documents
Depending on your reason above, you should attach proof in the form of insurance claims, doctors’ reports and hospital records, a death certificate, or pictures of floods/hurricanes leading to the destruction of documents. The IRS evaluates whether the person acted prudently according to the circumstances but could not because of circumstances beyond their control. They will also check whether the taxpayer could have foreseen the event causing non-compliance and what steps they could have taken to ensure compliance.

Statutory Exceptions

Congress may provide statutory exceptions, giving taxpayers relief from tax penalties after major disasters like fires, hurricanes, earthquakes, and floods.

Administrative Relief

Qualified taxpayers can receive an administrative waiver called First Time Abatement (FTA) for penalties for failing to file, pay, or deposit taxes. Eligible taxpayers are those who show all of the following:
  • The taxpayer filed all returns or extensions
  • The taxpayer has paid or made arrangements to pay all outstanding taxes
  • The taxpayer was not required to file returns or was not assessed for penalties for three tax years before the year attracting the penalty

Correcting IRS Errors

The IRS must abate any penalties assessed because of an error in the written advice given by an IRS officer or employee in their official capacity. Where appropriate, the IRS may also consider abatement if the taxpayer shows they relied on an IRS officer’s oral advice. The taxpayer must prove that they exercised ordinary prudence and business care considering their situation, the advice rendered and the penalty. They will also consider the taxpayer’s filing and payment history and whether they received the correct information in written format.

Relying on a Tax Advisor

A taxpayer may receive limited penalty abatement for relying on a tax advisor – but this cannot be the only reason given. If there is a failure to file, pay, or deposit taxes, the taxpayer is still held liable even if he/she relied on a tax debt relief advisor. Only accuracy-based penalties based on reasonable cause may be abated.

Get Professional Tax Liability Advice from Finishline Tax Solutions

If you have received a notice of tax penalty from the IRS, you may be able to get penalty abatement. There is no guarantee of abatement even when you have reasonable cause, but you can improve your chances by getting Finishline tax professionals to help you apply for an abatement. Even if the abatement is rejected initially, our professionals can help you to file an appeal, during which the IRS agent will assess the totality of your circumstance. Contact Finishline Tax solutions today to fix your taxes once and for all.

Offer in Compromise – Is this a good tax relief strategy?

An Offer in Compromise (OIC) is a helpful tax relief strategy since, if successful, it clears your outstanding tax debt completely. Most other tax relief options have an outstanding amount that may continue to accrue penalties and interest. However, before the IRS accepts your OIC application, you must go through various steps that include submitting extensive documentation to support your claim. The IRS determines whether or not your application will be accepted, but you can improve your chances by submitting a compelling application. In this article, learn how Offer in Compromise works as a tax relief solution and how our tax debt relief professionals can help you make your application.

What Are Offers in Compromise?

An Offer in Compromise (OIC) is an effective method to eliminate your tax debt. It is a federal program where the taxpayer settles the outstanding debt for cents to every dollar owed. Low-income families can pay their debt for considerably less than they owe. OIC is open to all income levels and ages, but the IRS does not accept all applications. Their acceptance rate changes from year to year, but it has accepted 25-45% of applications in the last few years.

Eligibility for Offers in Compromise

Several strict pre-qualifiers make a taxpayer eligible for tax settlement through OIC. First, the IRS looks at your reason for requesting OIC tax settlement, and they only consider applications where:
  • It is not certain that the IRS correctly assessed your outstanding taxes
  • It is not certain that the IRS will be able to recover the full amount, e.g. if you owe more than your assets and income
  • Paying off your tax debt in full will cause the taxpayer undue economic hardship – called effective tax administration
For reasons 2 and 3 above, the IRS also considers the following:
  • Whether you can pay and how much you may be able to pay
  • Your current income
  • Your current assets
  • Your current expenses
The IRS will generally accept OIC that meets the maximum amount you can pay within a reasonable period. You are ineligible for OIC settlement, however, if:
  • You have ongoing bankruptcy proceedings
  • You have not been paying your required installments/payments
  • You have not filed your federal tax returns
  • If self-employed with employees, you have not submitted the requisite federal tax deposits
Generally, the IRS only accepts offers in compromise greater than or equal to a tax liability’s collection potential.

How to Submit an Offer in Compromise

The smallest offer the IRS accepts as OIC depends on your financial ability. Businesses use form 433-B to reveal their financial state, while self-employed or employed wage-earners should use Form 433-A. You should reveal the following:
  • Income and expenses
  • If you declared bankruptcy
  • Whether you own a safe deposit box and its contents
  • If you have benefited from an estate, trust, or life insurance policy and its details
  • Any bank account balances, investments, available credit, and cash life insurance policies
  • Any tangible and intangible assets
College or private school expenses and charitable and voluntary retirement contributions are not allowable expenses. Once you have these details, it’s important to get a tax professional to help you assess the minimum offer value. Apart from the offer, you must submit several forms, including collection information statements, the application fee, and proof of payment of the first instalment of your offer. If you wish to pay a lump sum, the first payment should be at least 20 percent of the total offer. If the IRS accepts your OIC, you must pay the remaining amount in no more than five payments.

Get Help with Your Offer in Compromise at Finishline Tax Solutions

You can use the IRS OIC pre-qualifier tool to check whether you are eligible for OIC. However, note that eligibility does not translate to acceptance. For example, if you can pay your outstanding taxes through an instalment agreement, you don’t qualify for an OIC tax settlement. There are many steps to filing an OIC application and even appealing upon rejection. Our Finishline Tax professionals can help you with these steps to maximize your chances of a favorable outcome. Contact us today to get started.

Finding the Best Tax Debt Relief Solution

Finding the Best Tax Debt Relief Solution - FinishLine Tax Solutions

When you find yourself owing back taxes, you may be at a loss for how to proceed. Unfortunately, many taxpayers don’t know the tax debt relief options open to them until they face various tax debts as a result of IRS audits, fines, penalties, levies, or liens, as well as unpaid payroll taxes and IRS wage garnishment.

Regardless of your tax challenge, there are five primary methods to get tax relief when you owe back taxes. You may be able to take advantage of just one or two of these solutions according to your specific circumstances.  

#1 Offer in Compromise (OIC)

An Offer in Compromise is an agreement between the IRS and a taxpayer where the latter pays less than the outstanding taxes they owe. The IRS does not accept all applications for Offers in Compromise - the current success rate is only 25 percent. Still, if OIC is ideal for you, we can help you to settle the debt once and for all to avoid further accrual of penalties and interest on the tax debt.

#2 Penalty Abatement

You can apply for penalty abatement when the IRS tacks an automatic penalty onto your outstanding taxes without considering your situation/reason for nonpayment. A tax relief professional can help you to file ‘reasonable cause’, which is written proof explaining the reason for nonpayment. If successful, you will get the penalties removed (or refunded if paid) and have more time to pay your outstanding taxes.

#3 Installment Agreement

IRS Installment agreements get the best reception from the IRS since the taxpayer undertakes to pay the debt in full. You can choose to pay your outstanding taxes in manageable instalments over some time if you cannot afford to pay at once. You can also seek an extension on an existing installment agreement should your financial situation deteriorate.

However, note that you must apply and meet the requirements before IRS approves your installment agreement. Further, penalties and interest will continue to accrue on the outstanding amount until you have paid in full. 

#4 Currently Non-Collectible (CNC)

If you cannot pay your back taxes because your financial situation has deteriorated (e.g. if you lost your job), you can apply for a Currently Non Collectible status. CNC applications can be approved if you show that your total income is less than the allowable living expenses according to federal standards

If your application is approved, the IRS will grant you a reprieve from usual recovery and collection tactics. After 1-2 years, they will reassess your financial situation to determine whether you can resume payments. Also, you are required to notify the IRS if your financial situation improves. Note that penalties and interest continue to accrue while your account is in CNC status.

#5 Tax Audit Appeal

You can contest a tax audit if you feel that the IRS-recommended audit is inappropriate or incorrect. Disputed IRS audits are often settled when you initiate an appeal. Take advantage of the fact that the IRS prefers to resolve such issues because it is expensive, and they lose time and risk judgement against them. You need a tax professional who is familiar with the audit process to negotiate on your behalf.

#6 Innocent Spouse Relief

One spouse can apply for relief from tax liability or penalties for taxes filed jointly. However, you must prove that you were unaware of the understated income or taxes when you signed the tax return. A professional can help you to assess whether this avenue is right for you.


Regardless of the tax relief solution you choose, it is critical to use a reputable and experienced tax relief company. Check their reviews on independent review sites like the Better Business Bureau or get referrals from trusted people in your networks.

The most important thing to remember is that you’re looking for a solution that minimizes or reduces the penalties and interests on outstanding taxes to the barest minimum. That’s what a tax debt specialist can help you to assess according to your particular circumstances.

What You Need to Know About IRS Hardship

flts tax professional

Not every one that owes back taxes to the Internal Revenue Service (IRS) can make full payments in one fell swoop. The IRS has many avenues to pay back taxes in installments, but some people are still unable to clear their tax debt. If your current financial situation makes it difficult/impossible to pay back taxes and meet your daily living expenses, there are other avenues to explore. It is possible to apply for the IRS Hardship Program, which grants you temporary reprieve from settling your tax debt relief. Learn more about the IRS Hardship Program in this article.

What Is the IRS Hardship Program?

As mentioned, this program gives taxpayers temporary reprieve on back taxes they owe by placing their account in CNC status (Currently Non-Collectible). According to IRS Policy 5-71, your tax liability is considered CNC if you can show that paying the taxes will create hardship. If you have difficulty repaying back taxes, it may be better to pursue an Offer in Compromise (or settlement) before seeking CNC status. The OIC status allows you to pay a fraction of the debt (which you suggest according to your financial ability) for the liability to be cleared. Meanwhile, the CNC status is temporary; if your financial situation gets better, you will resume payment at a later date. To apply for CNC status, the IRS requires that you fill one of three forms: Form 433A for individuals, Form 433F for self-employed individuals, and Form 433B for C corporations, S corporations, and partnerships looking for hardship status.

Assessing Financial Health for IRS Hardship Applicants

When you apply for the Hardship Program, the IRS assesses the application to determine whether you qualify for CNC status. Apart from living expenses, the IRS considers the following:

  • Number, age, and health status of dependents where applicable
  • Your employment status and age
  • Health status of close family members
  • Cost of living in your locale
  • Any extraordinary expenses

They will assess your financial health, checking whether you are able to borrow against assets you own, all your income sources, or inability to work harder because of a medical condition. You should be able to show that:

  • You lost your job and are/aren’t receiving unemployment benefits
  • Your income has declined
  • You have been looking for a job with no success
  • You were forced to wind up your business
  • You lost your home in foreclosure or sold it at a loss
  • Your employer went out of business

Protections of the IRS Hardship Status

During IRS Hardship, the IRS cannot seek repayment of your tax liability, whether through wage garnishment or seizure of property or assets. However, note that the tax liability is not forgiven, and penalties and interest on the loan continue to accrue. Every year, the IRS sends a bill showing the amount owed. You will pay that amount once the Hardship status is lifted. The CNC status can be held for ten years, and the IRS reviews your income/financial status every two years. They will lift the status if they believe you can now support yourself and dependents. At this point, you must resume payment. However, you can also pay down your debt if you have extra money while under CNC status. Making payments this way doesn’t affect your CNC status until the next scheduled review.

Need to Handle Your Tax Liability? Look for Tax Professionals

When you are unable to pay your tax liability, it can be difficult to decide the next steps to take. No two people have the same financial situation, which is where tax professionals come in. At Finishline Tax Solutions, we can represent your best interests to apply for tax relief and negotiate on your behalf with the IRS. Our job is to determine the best solution and even file an Appeal if your request for CNC status is denied. We can also help you to prepare and file your taxes in time.

Talk to a Professional Today

IRS Hardship Program: How can it help you?


Are you behind on your taxes, and there is no way you can pay them off? Don’t worry! The IRS has got your covered. You might think that the IRS is the last place where you would seek help during a monetary crisis. However, the IRS offers a number of tax relief programs for taxpayers who are going through extreme economic hardship. One such option is the IRS hardship program.

Under the IRS hardship program, a person might qualify for the ‘Currently Not Collectible’ status. Once you get this status, the IRS cannot take your property or paycheck for fulfilling the outstanding tax debt. Learn more about the IRS hardship programs from experienced tax resolution service providers. These professional experts can also help you get a payment plan with the IRS.

Reasons for which you can get the CNC status

There are a number of reasons for which you can get the CNC status through the IRS hardship program. The basic stipulation is that a person is qualified for the CNC status if the collection of the debt would create a financial crisis for them where they are not able to pay essential living expenses. However, you would have to prove your hardship to the IRS. For this, you will be submitting financial information using Form 433A/433F or Form 433B - the former is for self-employed or individual taxpayers while the latter is for partnerships and corporations. Through the Collection Information Statement and the supporting documents, the IRS will get the following information:

  • Everything you own, including bank accounts, real estate properties, investment portfolios, cars, motorcycles, trucks, boats, life insurance, retirement savings, etc.
  • Expense statements of the last 3 months
  • Income statements for the last 3 months
  • The market value of every asset you have
  • A three-month average of expenses and income on the basis of category

Under the IRS Hardship Program, the taxpayers also need to disclose sensitive financial information. This is why some taxpayers opt for an online payment agreement. The online payment agreements do not only have less disclosure but are also easier to qualify in comparison to the IRS Hardship Program.

Who is qualified for the IRS Hardship Program?

Once you have been declared CNC under the IRS Hardship Program, no collection actions will be taken against you for collecting the tax debt. These collection actions include:

  • Tax Lien - Legal claim by the government on your property, including personal, real asset, and financial assets.
  • Tax Levy - Selling away your property for settling the outstanding debt.
  • Garnished wages - Collecting a portion of your income until the debt is settled off.

All the rules of the IRS Hardship Program are applicable for 10 years which is also the duration the federal agency has for collecting back taxes. After 10 years, the statute of limitations is enforced. Every two years after declaring the CNC status, the IRS will be reviewing your information. They do this to check if you still are eligible for the IRS Hardship program. If they find that you are financially capable of paying your tax debt, they will revoke the IRS Hardship program and remove your CNC status.

When you are in the IRS Hardship Program, the government won’t be seizing your property, wiping your account, or taking away your paycheck. But, this doesn’t mean that you are off the hook. The CNC status just stops the collection actions. The interests and penalties will still accrue on your debt. Here are some of the penalties you will be facing for not paying your taxes and late filing.

Penalties you will be facing for not paying your taxes and late filing

If you don’t file your returns by 15th April, the return due date or the extended date you receive after filing for an extension, you will be charged 5% of the unpaid tax every month for up to 5 months.
Failure to Pay

Not paying the taxes by the due date or the extended date can result in a penalty of 5% of the unpaid tax. In case of an approved installment period, you will be charged 0.25% of the debt. If you pay within 10 days after receiving the Notice of Intent to Levy, a penalty of 1% of the tax debt will be charged. For every month you don't pay the taxes, there will be a recurrent charge until the penalty reaches 25% of the debt or you pay off the debt.

Even if your account is currently under the IRS Hardship program, it doesn’t mean that your status won’t roll over automatically. The IRS considers your eligibility for the program separately. If possible, you should pay the new taxes immediately. It won’t have any effect on your CNC status from the past years.

However, if you are not able to pay the new taxes also, you can request CNC status under the IRS Hardship Program for that year as well. With each year, it will become increasingly difficult to get that status. Also, the IRS will penalize you, and in the end, you might be forced to pay the debt using alternative payment methods like Installment Agreement or Offer in Compromise. If you are eligible for the IRS Hardship program, it is best that you hire professional experts. They will be advocating on your behalf and help you get the best tax relief option available.

Frequently Asked Questions About IRS Hardship Program

A person qualifies for an IRS Hardship if


➢ Their annual salary is less than $84,000

➢ They have very little or no money left after paying for living expenses

➢ The IRS definition of basic living expenses can be divided into four expense categories

  • Housing and utilities
  • Transportation
  • Medical expenses (out-of-pocket)
  • Food, personal care products, clothing, and housekeeping supplies

Begin the process of filing for financial hardship by filling out the appropriate forms (you will find related information on the IRS website). Taxpayers filing for a personal obligation are required to fill out and send in Form 433-A. Individuals requesting business tax debt must fill out and send in Form 433-B. 

Mail copies of your monthly bills for utilities, food, personal expenses, mortgage or rent, medical bills with your IRS form. 

The IRS would agree that you have financial hardship if you prove that you cannot or can barely meet your living expenses, and paying your taxes would create an unfair financial hardship. If you qualify, the IRS will not seize your property or attach your bank account while you have a hardship status. However, you will still owe back taxes.