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Tax Debt Relief When You Have a Financial Hardship

Tax Debt Relief When You Have a Financial Hardship

The IRS offers several types of tax debt relief for taxpayers who are experiencing a financial hardship. You’ll have to work with the IRS to find the type of tax relief that works best for your situation.

You may be able to use any of the following tax resolution options:

  • Payments plans that offer lower monthly payments
  • Currently Not Collectible (CNC) status
  • Offers in Compromise (OICs)
  • Levy release due to economic hardship

Payment Plans During Financial Hardship

The IRS typically expects you to pay a certain amount towards your tax debt each month when you enter into an installment agreement. If this amount won’t fit your budget, you’ll need to do some more work to get your payment plan approved.

First, you may need to provide a Collection Information Statement to illustrate your financial situation. You may be able to get a lower monthly payment amount, but you’ll still generally need to pay off your full balance before the Collection Statute Expiration Date (CSED) expires.

If your CSED is nearing and you won’t be able to pay off your full balance, you can attempt to negotiate a partial payment installment agreement. These payment plans are less common than other installment agreements because they provide partial forgiveness of your debt.

Currently Not Collectible Status

CNC status gives you a break from the threat of IRS collection actions. The IRS won’t levy your assets or garnish your wages while your account is classified as CNC.

Once again, you may be required to submit a Collection Information Statement to qualify for CNC status. If you qualify, the IRS may check back at a later time to see if your financial situation has improved.

Offers in Compromise

An OIC is a settlement of your tax debt for less than you owe. To qualify, you’ll need to submit an offer that meets IRS requirements.

Your offer amount will depend on your equity in assets and how much income you have available to pay the IRS. If you have assets you can sell or income you could use to make monthly payments, your offer may be rejected.

Work with a tax attorney to make sure you qualify for an OIC and to get help with the application process.

Levy Release Due to Financial Hardship

If you receive a Notice of Intent to Levy and are experiencing a financial hardship, you have a limited time to stop the levy. You typically have 30 days from the date on the notice to request a Collection Due Process (CDP hearing.

At the CDP hearing, you can request a levy release due to financial hardship or use another tax resolution strategy. The important thing is to avoid the levy before it happens!

Contact a tax resolution attorney to find out the best way to resolve your tax problems and take advantage of IRS financial hardship programs.

The Gartzman Law Firm can help you with levies and other IRS tax problems. Use our contact form to request a consultation with an Atlanta tax resolution attorney.