Do you feel like you’re drowning in debt with no way out?
If you’re trying to keep up with daily expenses while dealing with IRS debt, the hardship relief program from the IRS may be able to help you.
This guide explains what the program is, who qualifies, the available options, and how to apply today.
Watch this quick video to understand if you truly qualify for IRS hardship status. → Navigating IRS Hardship: Understanding Currently Not Collectible (CNC) |
What is the IRS Hardship Relief Program and How Does It Work?
The hardship relief program is an IRS tax support option for individuals who are unable to pay their IRS bills due to financial difficulties. If you’re unable to cover your basic living costs like food, rent, or medicine and still owe taxes, this program might help you.
Here’s what it means:
- The IRS puts a pause on collecting your taxes.
- You may be able to secure a more favorable payment plan or settle your debt for less than you owe.
- It doesn’t mean your tax debt goes away right away, but it gives you temporary relief to manage your finances.
This program exists to protect struggling taxpayers from being pushed over the edge.
However, to get this program, you need to qualify and apply the right way.
The three main forms of help in this program are:
- Delay collection through the Currently Not Collectible status
- Monthly payment plans through an installment agreement IRS
- Settle for less through an Offer in Compromise
These options are part of the broader IRS Fresh Start Program, which was expanded to help more taxpayers. Each one is meant to give relief during tough times.
Who Qualifies for the IRS Hardship Relief Program?
To get into the IRS hardship program, you must prove you’re facing serious financial struggles. The IRS wants to know if paying taxes would force you to skip meals, lose your home, or go without medical care.
You may qualify if:
- You’ve lost your job
- Your income is very low
- You have high medical expenses
- You’re barely covering rent, food, or gas
- You support children or aging parents on a small income
- You’re dealing with a disability or illness
The IRS considers your full financial situation, including monthly bills and income, to decide if you truly need help.
Read: How to Fix Tax Problems: Expert Solutions Guide
IRS Hardship Relief Program Eligibility Guide
To qualify for the hardship relief program, the IRS must see clear proof that you cannot pay your tax debt without risking y ur ability to survive financially. Here are the steps they use to determine that:
1. Income below a certain limit
The IRS does not set a strict income cap for hardship relief. Instead, it uses Collection Financial Standards, which vary by location and family size, to assess whether your income is sufficient to cover basic living expenses.
2. Living expenses must be reasonable
Your spending must match what the IRS calls “collection financial standards.” These standards define what counts as necessary expenses. You must show that your income barely covers:
- Rent or mortgage
- Utilities (water, power, gas, phone)
- Food and groceries
- Health insurance and medical expenses
- Transportation (bus fares, gas, car payments)
If your money is only going toward these types of expenses and there’s little to nothing left over, you may qualify.
3. Very little disposable income
The IRS subtracts your monthly living expenses from your monthly income. If the result (called “net disposable income”) is $0 or very low, you could be approved for the hardship relief program.
4. Asset review
The IRS will ask about your savings, property, investments, vehicles, and other assets. If you have assets with significant value, they might ask you to sell some of them before giving relief. However, if selling these items would still leave you in hardship, you may still qualify.
5. Supporting documents are required
You must send paperwork to prove everything. This includes:
- Pay stubs or income reports (last 3 months)
- Bank statements
- Rent, utility, and medical bills
- IRS Form 433-A or 433-F (for individuals)
- IRS Form 433-B (for businesses)
Once the IRS reviews this information, it’ll decide whether your case fits the IRS hardship qualifications.
Key Requirements to Qualify for Financial Hardship ReliefHere’s a quick checklist of what you’ll need to meet the IRS’s hardship rules: Income and expenses:
Documentation:
Other conditions:
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IRS Tax Relief Options Under the Hardship Program
You don’t get just one option. The IRS offers several ways to reduce or delay your tax burden if you qualify.
Settle IRS Debt with an Offer in Compromise
An Offer in Compromise (OIC) is when you settle your debt for less than what you owe.
For example, you may owe $25,000 but only be able to pay $6,000. If the IRS believes that’s all they can get from you based on your income, expenses, and assets, they might accept it.
To apply:
- You must fill out IRS Form 656
- Submit Form 433-A (OIC) showing your finances
- Pay a $205 fee (unless you qualify for a fee waiver)
- Make an initial offer payment
However, OIC is not guaranteed. If the IRS believes you can pay overtime or sell assets, they’ll reject your offer.
But if approved, this can be a powerful option for those who qualify for tax debt forgiveness.
Apply for IRS Installment Agreements to Ease Payment
If you can’t pay your full debt today but can make small payments each month, you can apply for an IRS Installment Agreement.
This is a payment plan that breaks your debt into smaller monthly payments over time.
There are several types:
- Short-Term Plan (up to 180 days): No setup fee required.
- Long-Term Plan (more than 180 days): A setup fee applies, but payments are affordable.
This option:
- Avoid collection actions like wage garnishment or property seizure.
- Maintain a good standing with your account until you continue to pay
- Adds interest and IRS penalties
- Requires auto-debit if your balance is high
If you owe under $50,000, this process is faster. And in case it exceeds $50K, you’ll need additional forms and documents. The IRS checks your income and expenses before approving.
Currently Not Collectible (CNC) Status Explained
If you truly can’t pay anything, not even a few dollars, you might qualify for Currently Not Collectible status.
Once you qualify:
- The IRS stops all collection efforts (no calls, letters, wage garnishment, or levies)
- You don’t make any payments
- The IRS will review your case later (usually after 1–2 years) to see if your situation has changed.
You still owe the debt. But this gives you breathing room during hard times and time to get back on your feet.
This is one of the strongest forms of financial hardship IRS protection, especially for low-income households or people on Social Security or disability.
How to Apply for the IRS Hardship Relief Program Step-by-Step?
Getting into the hardship relief program isn’t hard. Here’s how to do it properly:
Step 1: File all past due tax returns
The IRS won’t consider your case unless you’re up-to-date.
Step 2: Choose the correct form of relief
Pick the one that fits:
- CNC if you can’t pay anything.
- An installment agreement if you can pay monthly.
- Offer in Compromise if you need to reduce debt.
Step 3: Gather financial info
Collect:
- Pay stubs or benefits info
- Bank statements (last 3 months)
- Rent, utility, and medical bills
- Car payment and insurance info
Step 4: Fill out IRS forms
Use:
- Form 433-A for individuals
- Form 433-F if requested
- Form 656 for Offer in Compromise
Step 5: Send it to the IRS
Mail your forms to the right IRS office or submit them through a tax professional. OIC submissions can be done via an IRS online account
Step 6: Wait for review
The IRS may:
- Approve
- Deny
- Ask for more documents
This review can take anywhere from weeks to months, depending on the option. If denied, you can appeal.
Benefits of Enrolling in the IRS Hardship Relief Program
The hardship relief program helps protect your financial life from falling apart. Here are the real reasons it helps:
- Stops collections: No IRS letters, wage garnishments, or bank levies
- Protects your home and income: The IRS usually avoids taking your home while you’re in hardship status
- Gives you time: You get a break to rebuild your finances
- May reduce your debt: If you qualify for an Offer in Compromise
- Helps your credit indirectly: IRS debt isn’t on your credit report, but removing liens can help
Common IRS Hardship Application Mistakes to Avoid
Many people make errors when applying. These can cause delays or denial. Mistakes can ruin your chances.
Avoid these common mistakes:
- Don’t leave out filing returns.
- Don’t lie or estimate your income/expenses.
- Don’t skip necessary documents.
- Don’t miss deadlines or ignore IRS requests.
- Don’t pick the wrong program.
- Don’t assume IRS help happens automatically.
- Don’t forget to update the IRS when your situation changes.
Be honest and thorough. If you’re unsure, get help from a CPA or tax relief expert.
Take Action with Hopkins CPA Firm Before It’s Too Late
If you’re facing financial challenges and are behind on your taxes, the hardship relief program is here to help.
If you need expert guidance or are struggling alone to figure things out, our team at Hopkins CPA Firm can walk you through the entire process, from checking if you meet IRS hardship qualifications to applying for the right IRS tax relief options.
Let us walk you through the process with care and confidence. Book your consultation today, your peace of mind starts now.
FAQ
How long does the hardship status last?
When granted “Currently Not Collectible” (CNC) or hardship status, the IRS temporarily halts collection efforts. It reviews your financial situation typically every 1–2 years to decide if you still qualify. The status remains in effect until either your finances improve or the 10-year collection statute expires. Interest and penalties continue to accumulate during this time. It’s not a fixed-term program; it lasts as long as financial hardship persists, subject to periodic review.
Will this program forgive all my taxes?
No. Hardship status temporarily pauses IRS collection actions, including levies and garnishments. However, the debt remains, and interest, plus penalties, continue to accumulate. It’s not a debt forgiveness program; it simply delays collection until you’re able to pay. To reduce your actual debt, you’d need to apply for an Offer in Compromise separately.
Does the IRS check my bank account?
Yes. They can review your bank statements and spending to confirm your hardship. They might also pull credit reports or public records to verify your situation. Once approved, they won’t actively seize bank funds while your status is in effect.
Can I apply if I’m self-employed?
Yes. Self-employed individuals can apply for hardship or CNC status. You’ll need to submit Form 433-A (individual) or Form 433-B (business) detailing your income and expenses. Provide proof like bank statements, profit/loss reports, and business cash flow documents. The IRS assesses self-employed applicants just as it does wage earners.
Will the IRS take my home or car?
While in hardship status, the IRS typically won’t levy or seize your home, car, or wages. They may file a Notice of Federal Tax Lien, which can affect your credit and ability to sell property. As long as you maintain hardship status, seizure isn’t enforced. If your situation improves and CNC is revoked, collection actions could resume.
Can I appeal if my request is denied?
Yes. If denied CNC status, you have appeal rights through a Collection Due Process (CDP) hearing. If that path fails, you can escalate to the Collection Appeals Program (CAP) or even file a petition in the U.S. Tax Court. Deadlines apply, usually the date on your IRS denial notice. A tax professional can help guide you through appeals effectively.
