Having Trouble Paying the IRS? Explore Your Options with IRS Representatives

If You Qualify, the IRS May Suspend Your Case In these challenging economic times, many people are struggling to make ends meet. Although it’s not widely publicized, you might be eligible for an economic hardship exemption, which could temporarily halt your case. At Clarity Tax Resolutions, our team of CPAs, tax attorneys, and IRS agents is here to guide you through this process.

The Method

  1. Step 1: Submit a Financial Statement Your most recent financial statement is required by the IRS to assess your eligibility for economic hardship tax relief. You will need to complete Form 433-F or Form 433-A, depending on which IRS unit is handling your case.
  2. Step 2: Documentation Ensure that all of your tax returns are currently filed with the IRS and that your financial statement is accurately documented. The IRS will also verify whether you are making estimated tax payments or have sufficient withholding to prevent you from owing taxes this year.
  3. Step 3: IRS Evaluation The IRS will evaluate your financial circumstances to determine if you qualify for hardship status. If approved, your case will be placed in a currently non-collectible file, suspending collection efforts for the next two to three years until your adjusted gross income shows an ability to make payments.

Understanding Economic Hardship

When a taxpayer can pay their liability in full but doing so would create financial hardship, the IRS considers various factors before taking collection or enforcement actions, such as federal tax liens or levies. Economic hardship is defined by Treasury Regulations § 301.6343-1 as the inability to cover reasonable basic living expenses.

Department of Labor Platforms

The IRS, in conjunction with the U.S. Department of Labor, has established platforms to determine hardship and living standards, also used by the Department of Justice in bankruptcy proceedings. These standards can be found on our website.

Criteria for Economic Hardship

  • Basic Living Expenses: The IRS determines what constitutes reasonable basic living expenses, which vary from person to person.
  • Financial Documentation: Comprehensive financial documentation is required, including bank statements, canceled checks, credit reports, and loan applications from the past three years.
  • Additional Considerations: Factors such as age, employment status, dependents, cost of living, unusual circumstances, health issues, and education level may be taken into account.

Additional Causes of Economic Hardship

  • Extended Illness or Disability: When a taxpayer’s resources for care and support are depleted due to illness or disability.
  • Fixed Monthly Income: The taxpayer has a fixed income and no other means of support, exhausted each month on dependents.
  • Inaccessible Assets: The taxpayer cannot borrow against or liquidate assets without jeopardizing basic living expenses.
  • Catastrophes: Unexpected misfortunes or acts of God affecting the taxpayer or immediate family members.

IRS Will Eliminate Levies for Economic Hardship

A tax levy will be released if the IRS finds that the taxpayer is experiencing economic hardship and is unable to meet necessary living expenses. To obtain a levy release, the taxpayer must act in good faith, fully disclose all assets, and provide accurate financial information.

Why Choose Clarity Tax Resolutions?

  • Expertise: Our team, with over 15+ years of professional experience including 60 years directly with the IRS, is well-versed in tax law.
  • All-Inclusive Service:We manage your case from start to finish.
  • Client-Centered Solutions: We prioritize your financial stability, offering reasonable and practical tax relief options.

Concerns Regarding Installment Agreements?

If you have any questions, please email us! We can assist if the IRS filed an amended tax return on your behalf. We are familiar with the National Standards the IRS uses in all cases and are here to help.

Contact Us Today

If you’re having trouble paying the IRS, get professional advice from Clarity Tax Resolutions. Our knowledgeable staff is here to help you navigate financial difficulties and safeguard your future.