If you’re drowning in tax debt, you might wonder: How do I get an IRS hardship? This question hits home for nearly 9 million Americans who face unresolved tax issues each year. The IRS offers several relief options that can save you from penalties, wage garnishment, and more. Below is a list of the common paths you can take to secure relief:
- Installment agreements
- Currently Not Collectible (CNC) status
- Offer in Compromise (OIC)
- Penalty abatement and adjustment programs
In this guide, you’ll discover what each option entails, who qualifies, and the exact steps you need to take to apply. By the end, you’ll have a clear action plan to reduce, postpone, or even eliminate the tax debt that’s weighing on you.
Read also: How Do I Get An Irs Hardship
Understanding IRS Hardship Options
IRS hardship can come from an installment agreement, currently not collectible status, or an offer in compromise.
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Eligibility Criteria for Currently Not Collectible
The IRS may deem you “currently not collectible” if you lack sufficient income or assets to pay your tax bill. This status temporarily stops the agency from pursuing collection activities, but it doesn’t erase the debt.
To qualify for CNC you must provide:
- Proof of low income or unemployment
- Documentation of essential expenses (housing, utilities, food)
- Evidence that your debt is not enforceable with existing assets
Even if you are granted CNC, the IRS will continue to assess interest and penalties on the unpaid balance, so you should plan a future payment strategy.
Be sure to submit the main Form 433-A (for individuals) or Form 433-B (for businesses) by the deadline the IRS specifies, usually within 90 days of application.
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How to Apply for an Offer in Compromise
An Offer in Compromise lets you settle your tax debt for less than the full amount you owe. It’s ideal if you’re facing financial hardship, illness, or a limited tax basis that would make repayment impossible.
Here are the steps you’ll follow:
- Complete Form 656 and Form 433-A (OIC)
- Calculate your “reasonable collection potential” (RCP)
- Submit your offer amount and supporting documentation
- Wait for IRS response; they may approve, reject, or ask for additional info
Supporting documents often include bank statements, pay stubs, property listings, and medical bills. You’ll also need to pay an application fee unless you qualify for a fee waiver due to low income.
After submission, the IRS has 30 days to respond. If they approve, you’ll typically receive a payment plan to enforce the agreed amount; refusal may prompt them to take more aggressive collection actions.
Using an Installment Agreement to Manage Cash Flow
If an Offer in Compromise seems too ambitious, an installment agreement may be the simpler route. This allows you to pay a portion of your debt each month, reducing the burden on your monthly budget.
Key points include:
• The IRS offers two main types: short-term (up to 180 days) and long-term (usually 36 months). Short-term is self-managed; long-term is automatic with bank payroll deduction.
| Agreement Type | Duration | Payment Amount | Set-up Cost |
|---|---|---|---|
| Self-Managed | Up to 180 months | Minimum $25 | None |
| Automatic | Up to 60 months | Minimum $55 | Bank fee $25 |
Remember to remain current on future tax returns; the IRS may terminate the agreement if you file late or miss payments.
Use the IRS Online Payment Agreement tool for instant approval on short-term agreements up to $10,000. For larger balances, you’ll need to call the IRS partner.
When to Seek Professional Help and Tax Resolution Firms
Navigating IRS hardship programs can be complicated, especially if you’ve been dealing with large amounts or complicated filings. Professional tax resolution firms or certified public accountants (CPAs) can streamline the process.
Pros of hiring an agent:
- Expertise in complex cases like bankruptcy or expatriation
- Negotiation skills to secure better terms
- Automation of paperwork and deadlines
Cons to consider:
- Fees range from $1,000 to $3,000 plus a percentage of the debt
- Some firms may overpromise or lack transparency
- The IRS can still deny your application regardless of representation
When choosing a professional, verify their credentials with the IRS Taxpayer Advocate Service (TAS). A TAS referral is free and might be enough to move you forward.
Assess whether your situation truly warrants this investment: for debts under $10,000, many taxpayers successfully negotiate on their own.
Now that you’ve seen the array of options and steps, it’s time to take action. Begin by gathering your financial documents and determining which relief path aligns best with your circumstances. If you hit a roadblock, consider a trusted tax professional who can advocate on your behalf, keeping you from falling deeper into debt.
Don’t wait until penalties mount. Contact the IRS docs portal or call 1-800-829-1040 for immediate guidance, or visit your local IRS Taxpayer Advocate office for personalized help. Your relief begins with a single, informed decision today.