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Tax Relief: Does the IRS Make Allowances for Hardship?

Posted by Rob Daniel on Thu, Jun 03, 2010
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  If you are experiencing financial hardship that results in you not paying your taxes the IRS can put off collection procedures.  They will not waive your debt but they will delay collection by not taking your bank accounts or your salary.  IRS accounts do allow hardship status and this is stated in the Internal Revenue Service Policy Statement 5-71. If restricted income or assets exist but it is established that levy action would cause hardship then liability can be described as presently not collectible.  The levy action must stop the tax payer from maintaining living costs that are essential.  Every situation must receive individual screening in order to determine if the levy would be the cause of serious financial hardship or only an inconvenience to the tax payer in question.  Only after all the stages of the collection procedure are completed and it is established an account is presently not collectible should it be noted and detached from the register in force. The IRS refers to ‘hardship’ as ‘currently not collectible’.  The IRS transaction cipher refers to it as a ’53 case’.  This is the cipher placed in your account to show collective procedures have been postponed.  Only a total admission of living costs and income and an assessment of liabilities and assets will gain a ’53 case’.  Living costs made up of food, clothing, housing, utilities and car expenses will be compared to an IRS chart to determine if a hardship status exists.  No flow of cash is proof of hardship.  If the IRS believes you don’t have hardship and you are unable to change your budget to pay your taxes, you may have to think about bankruptcy to eradicate taxes. 

You must compare whether a hardship status, submitting an offer in comparison or bankruptcy is the best means of resolving your tax debt.  The money you owe doubles every five years due to penalties and interest.  The IRS takes ten years for collection and then any money owing is waived and your balance is down to zero.

 

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