ABOUT
SIGNIFICANT HARDSHIP ACCOUNTS
When
a taxpayer is unable to make installment payments and
can prove that enforcement of a levy would create
significant undue economic hardship to the extent that
the taxpayer would be deprived of basic necessities
the IRS will classify the back tax debt as currently
uncollectible and designate hardship status. Currently uncollectible accounts
continue to toll interest and penalties during the
period of suspended collection activity but allow time
for your economic circumstance to improve before
collection activity resumes.
"Significant
hardship" is
a highly subjective determination and number of
factors are considered when making a determination of
"significant hardship" . Enforcement action,
in and of itself, is not a hardship without additional
factors.
Significant hardship
considerations are made on a case by case basis. To
properly evaluate your eligibility for uncollectible
accounts status, tax authorities will consider the
following points:
-
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.
Tax
authorities will often grant immediate State or IRS
hardship status but will require completion and
remittance of Form 433A,
and Form 433B
if you are self employed to assess your overall
financial position and net disposable income.
The relevant taxing agency will use these forms or a
similar State form to determine the extent of your
ability to pay your back tax debt and will
subsequently determine your continued hardship
eligibility based on their definition of
"reasonable and necessary" living expenses
that are limited by prescribed financial
standards.
If
you currently fail to meet the required standards the
State and IRS will often grant hardship status, but
can and often do require that you adjust your
reasonable and necessary living expenses to levels
consistent with their
prescribed financial standards.
The
State and IRS will normally reassess your eligibility
for financial hardship status, annually.
Financial hardship status often provides only a
temporary stay, and does not provide permanent back
tax debt relief. Therefore, remedies should be
explored to reduce or eliminate the 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.
If you fail to remain
in compliance with your current tax obligation to file
and or pay the service center may remove you from
hardship status and begin collection activity.
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
