If you have an unpaid tax balance and can't afford basic living expenses, you may qualify for one of the IRS's hardship payment alternatives. To determine if you qualify, the IRS will ask you to provide detailed financial information by completing a Form 433-F or 433-A, called a Tax Information Statement. Contact the IRS immediately by calling the phone number listed on the tax or in the correspondence and explain your financial situation. If your wage tax is creating immediate economic hardship, you should release it.
If the lien on your bank account or other account is creating immediate economic difficulties, the lien may be released. Usually, excessive economic hardship occurs when you can't afford reasonable basic living expenses. Basic living expenses are those that cover health, well-being, and income generation for you or your family. We rely on the IRS Financial Collection Rules to help determine the allowable basic living expenses.
As has already been said, although the IRS will temporarily suspend collection methods due to the CNC's financial difficulties, penalties will continue to be imposed and IRS regulations on financial difficulties require that outstanding taxes be eventually refunded through alternative payment plans. Every year, under the IRS program for people with economic difficulties, the government will send you an email telling you how much you owe in taxes. These programs are much easier to qualify for than the IRS program for people with financial difficulties, and they require much less personal information. If you're facing financial difficulties from the IRS, the best thing to do is to hire a professional tax advocate for those difficulties.
The IRS rules on economic hardship state that CNC codes can only be used for “individual or joint IMF assessments, sole proprietorships, partnerships in which a general partner is personally liable, and limited liability companies in which an individual owner is identified as a responsible taxpayer”. To prove your tax difficulties with the IRS, you'll need to submit your financial information to the federal government. For the IRS to determine if a lien is causing economic hardship, it will usually need you to provide financial information, so be prepared to provide it to you when you call. It can be a legitimate option if you can't pay your tax obligations in full, or if doing so creates financial difficulties for you.
If you can't pay your tax bill because you only have enough money to survive after supporting your family, you may be able to take advantage of hardship payments from the IRS. Even if this shows that you can pay your obligations in full, you can submit a transaction offer and discuss your individual financial situation with the IRS. In other words, the CNC IRS difficulties are generally not aimed at most large companies, but rather at individual taxpayers and small business owners. Because the IRS financial aid program requires the release of very sensitive financial records, some taxpayers get tired of filing an informational statement about collection and instead opt for an online payment agreement.
If they find an increase in their income and believe it is within their means to pay their taxes, they will eliminate the CNC status and revoke the IRS obligation for economic hardship. If possible, it's best to pay the new taxes promptly, as they probably won't affect your difficulties with the IRS in recent years and will prevent you from incurring more debt. If you can't pay your new taxes, you can ask the IRS to pay for financial difficulties during that tax period, but this will get more and more difficult every year. Many taxpayers are unaware of the IRS procedures for difficult situations introduced by the IRS tax hardship program and the opportunities it creates for people experiencing tax difficulties.
