IRS Hardship Status

Although this is generally not a technique for a higher income taxpayer, this is one of my favorite IRS categories to win for some of my more overwhelmed clients.

What it basically means is that although you still owe the back taxes to IRS, IRS will just leave you alone for now and not try to collect from you at all. You pay them nothing. And sometimes that “for now” can last for several years. Interest will still of course accrue, but – don’t forget – if you can wait ten years it can all go away.

To gain hardship status, you submit the usual set of financial statements to IRS to prove you cannot afford to pay them anything, even on an installment basis.

If IRS approves this status, IRS then leaves you alone, usually for at least one year before coming back to review your status to see if you are doing any better.

The wonderful thing though about the vast IRS bureaucracy is that often IRS takes quite a few years before they come back to review this status, especially if in the meantime you have complied by filing and paying your later years taxes since you got your hardship status.

If you want experienced help in applying for hardship status, you should call me.

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