ABOUT
SIGNIFICANT HARDSHIP ACCOUNTS
When
a taxpayer is unable to make installment payments and
can prove that enforcement of a levy or garnishment would create
significant undue economic hardship by depriving the taxpayer
of basic living necessities
the IRS and some States will classify the account as currently
uncollectible and grant hardship status to suspend
collection activity. Currently uncollectible accounts
continue to toll interest and penalties but allow time
for the taxpayer's economic circumstance to improve before
collection activities resume.
Note:
There are some states that do not have hardship status
provisions nor do they care if you have to live in the
snow.
"Significant
hardship" is
a highly subjective term and enforcement action,
in and of itself, is not considered a hardship or
reason to designate an account as uncollectible without additional
factors.
Hardship is determined on a case by case basis. To
properly evaluate your financial circumstances and
determine if continued collection activity will result
in severe economic hardship tax authorities will
consider the following to identify uncollectible
accounts.
-
Will
the taxpayer be able to retain housing?
-
Will
the taxpayer be able to obtain food?
-
Will
the taxpayer be able to retain utilities
-
Will
the taxpayer be able to retain or obtain
transportation to and from work
-
Will
the taxpayer be able to remain employed
-
Will
the taxpayer be able to obtain essential medical
treatment and medications
-
Will
the taxpayer be able to obtain reasonable clothing
and shoes
-
Will
the taxpayer sustain an avoidable loss of
education
-
Will
irreparable damage be caused to the taxpayer's
credit rating
-
Will
the taxpayer be unable to meet payroll.
-
Will
the taxpayer be in forced into bankruptcy.
-
Is
the hardship sure to occur.
To
request State or IRS
hardship status you will be required to complete and
remit Form 433A,
and Form 433B
if you are self employed so that your overall
financial position and ability to provide for
"reasonable and necessary" living expenses
while simultaneously paying your back taxes may be
assessed. Reasonable and necessary are also subjective
terms and tax authorities use financial
standards as a guide to determine what is
reasonable and necessary.
Differences
between your actual expenses and those prescribed by
financial standards will generally require the
services of a tax professional to help resolve and
obtain hardship status relief.
The
State and IRS will normally reassess your eligibility
for hardship status, annually. Hardship status provides only a
temporary stay until your economic circumstances
improve and does not provide permanent relief.
Therefore, remedies should be
explored to reduce or eliminate your back tax debt.
There is a wide spectrum of State and IRS policies,
procedures, programs and tactics that have the
potential to eliminate or reduce the back tax debt and
include filing back tax returns, installment plans and
offer in compromise agreements.
If you fail to remain
in compliance with your current tax obligation to file
and or pay you may be removed from
hardship status and collection activity will resume.
OUR
PRIVACY AND SECURITY POLICIES
Our
organizational policies guarantee that "only"
contact initiated by you and required to complete the
income tax services we have been commissioned to
perform or to provide guidance sought will occur at
any time, now or in the future
