IRS Hardship Program: How to Apply and Qualify
If you can’t afford to pay your tax debt, the IRS hardship program may help. It includes two main options:
- Currently Not Collectible (CNC) status, which temporarily pauses IRS collections if paying would cause financial hardship.
- Offer in Compromise (OIC), which lets you settle your tax debt for less than you owe if you qualify.
Both options require proof of financial hardship. You’ll also need to submit IRS forms and financial documents and, in some cases, write a hardship letter.
Here’s how the IRS hardship program works, who qualifies, and how to apply.
Table of Contents
What is the IRS tax hardship program?
The IRS hardship program is for people who can’t afford to pay their tax debt without sacrificing basic needs like housing, food, or medical care. If you qualify, the IRS may pause collections or settle your debt for less than you owe.
The two main options are:
- CNC status. The IRS pauses collection efforts and marks your account status as “currently not collectible.” There are no wage garnishments, no levies, and no payment demands, but interest and penalties may still accrue.
- OIC. With an Offer in Compromise, the IRS may agree to settle your tax debt for less than the full amount. But you must prove you can’t afford to pay more.
Neither option erases your debt overnight. CNC status gives you time to recover, but the IRS will check in later. If your finances improve, collections can restart.
An OIC isn’t a guarantee, either. The IRS only accepts offers when it believes it won’t be able to collect more from you in a reasonable amount of time.
How do I qualify for an IRS hardship?
The requirements you’ll need to meet to qualify depend on which IRS hardship program you’re applying for: CNC status or an OIC.
How do you qualify for CNC status?
CNC status is for taxpayers whose income barely covers necessities. If you can’t pay your taxes without falling behind on rent, utilities, food, or medical bills, you may qualify.
According to the IRS website, the best way to know whether you’ll qualify for CNC status is to contact the IRS directly. You can either use the contact information included on any notices you’ve received, or call one of these numbers:
- Individuals: 800-829-1040 (or TTY/TDD 800-829-4059)
- Businesses: 800-829-4933
The IRS may ask for:
- Proof of financial hardship (the IRS might verify your income and expenses using pay stubs, bank statements, loan documents, or medical bills.)
- Form 433-F, Form 433-A (if an individual), or Form 433-B (if a business)
If approved, collections pause, but interest and penalties may continue to still accrue.
How do you qualify for an OIC?
OIC might be harder to qualify for because it reduces your overall tax debt. You can check whether you potentially qualify for an OIC using the IRS Offer in Compromise Pre-Qualifier Tool.
To qualify, you generally must:
- Prove financial hardship (income, expenses, and assets will be reviewed)
- Be current on all required tax filings
- Not be in an open bankruptcy case
- Submit Form 433-A (if an individual) or 433-B (if a business), Form 656, and an initial payment
If approved, you’ll pay the reduced amount through a lump sum or installment plan. If denied, you can appeal within 30 days using Form 12711 or explore other payment options.
It can take up to 24 months to receive a decision.
Indicators a client may be a good candidate for the IRS hardship program include individuals with limited disposable income resulting in a high expense-to-income ratio and little to no ability to pay their tax debt. Eligibility should be assessed by a tax professional or counselor with expertise in this area, but generally, those who qualify for Currently Not Collectible (CNC) status are individuals the IRS determines would face undue hardship if forced to make payments. Meanwhile, those seeking an Offer in Compromise (OIC) typically have limited income and cannot pay their full tax liability but may qualify for a reduced settlement through a structured payment plan.
What qualifies as an IRS hardship?
The IRS defines a financial hardship as a situation where paying your tax debt would prevent you from affording necessary expenses. This could include:
- Rent or mortgage
- Utilities
- Groceries
- Transportation costs
- Medical care
If paying your taxes means falling behind on these essential bills, you could qualify. However, just because you feel stretched thin doesn’t mean the IRS will see it that way.
The IRS will compare your expenses to national and local living standards. If you spend more than the IRS considers “reasonable” on housing, car payments, or discretionary spending, it might deny your request.
The key is proof. The IRS doesn’t take your word for it. You’ll need to back up your claims with documentation. If you can show that your financial situation truly leaves no room for tax payments, you have a strong case for hardship relief.
How to apply for the IRS hardship program
You’ll generally follow these steps to apply for CNC status or an OIC with the IRS:
1. Choose the right hardship program
The first step is to decide which program fits your situation:
| IRS hardship program | Best if | Way to find out if you qualify |
| Currently Not Collectible (CNC) status | You need to pause collections because you can’t afford payments right now | Call the IRS at 800-829-1040 or follow the steps in a notice you’ve received |
| Offer In Compromise (OIC) | You believe you could settle your tax debt for less than you owe | Use the IRS Offer in Compromise Pre-Qualifier Tool |
2. Gather financial documents
The IRS needs a full picture of your finances to decide if you qualify. Be prepared to provide any of the following:
- Recent pay stubs or proof of income
- Bank statements
- Mortgage or rent payment records
- Utility, insurance, and medical bills
- Statements for other debts (credit cards, loans, child support, alimony, etc.)
Having everything organized can speed up the process.
3. Fill out the required IRS forms
The forms you need depend on the program:
- For CNC status: Form 433-F and/or Form 433-A or 433-B.
- For an OIC: Form 433-A or 433-B, plus Form 656 and an initial payment.
These forms break down your income, monthly expenses, debts, and assets. Accuracy is critical. Mistakes or missing information can delay approval.
How to file a hardship with the IRS
If you’re applying for an Offer in Compromise, you will mail your forms to the address listed on Form 656-B. To pause collections with a status of Currently Not Collectible, call the IRS at 1-800-829-1040 for information on how to submit your forms.
You can also use a tax resolution service or contact the Taxpayer Advocate Service (TAS) if you need help resolving tax problems with the IRS. These services can help you get the tax assistance you need if you feel underwater.
How to write a hardship letter to the IRS
If you’re applying for the IRS hardship program—whether for CNC status or an OIC—you may need to submit a financial hardship letter. This letter explains your situation in your own words and supports your case for tax relief.
A well-written letter should include:
- Your personal information (full name and contact details)
- A clear statement of hardship (explain why paying your tax debt isn’t possible)
- A formal request for hardship status (Ask the IRS to approve CNC status or consider an Offer in Compromise)
- A list of supporting documents (mention the financial records you’ve included)
- A polite closing statement (thank the IRS for reviewing your request and provide your contact information)
Sample hardship letter to the IRS
Below is an example of a hardship letter that includes all the necessary details.
[Your Name]
[Your Address]
[City, State, ZIP]
[Your Phone Number]
[Date]
Subject: Request for Financial Hardship Status (Currently Not Collectible or Offer in Compromise)
To Whom It May Concern,
I am writing to formally request financial hardship relief for my outstanding tax balance of [$X,XXX], owed for [tax years owed]. Due to my current financial situation, making payments would put me in a position where I cannot afford basic living expenses.
Right now, my monthly income is [$X,XXX], while my essential expenses—including housing, utilities, food, and medical cost —total [$X,XXX]. I have attached Form [XXX-X] with a full breakdown of my finances, along with supporting documents such as recent pay stubs, bank statements, and medical bills.
In addition, I have recently faced [briefly explain hardship, e.g., job loss, major illness, divorce, or another financial setback], which has made it even harder to keep up with my financial obligations. Given these circumstances, I am requesting:
- Currently Not Collectible (CNC) status to temporarily suspend collection efforts or
- Consideration for an Offer in Compromise (OIC) to settle my tax debt for a reduced amount.
I understand my responsibility to resolve this debt and will update the IRS if my financial situation changes. Please let me know if you need any additional information.
Thank you for your time and consideration. I appreciate the opportunity to find a manageable resolution.
Sincerely,
[Your Name]
Want a ready-to-use template? Download our IRS Hardship Letter Template to make the process easier.
Where to get help with hardship tax relief
Qualifying for hardship relief doesn’t happen overnight. (It can take up to 24 months to get approved for an Offer in Compromise.) However, several resources are available if you get stuck or need help along the way.
1. Work with a tax relief company
Tax relief companies specialize in helping taxpayers apply for hardship programs, negotiate settlements, and deal with IRS collections. They could:
- Review your financial situation to determine if you qualify for CNC status or an Offer in Compromise.
- Prepare your hardship application to ensure all forms and documents are correct.
These services aren’t free, and the Federal Trade Commission advises you to watch out for tax relief scams.
If you’re considering working with a tax relief company, our team has vetted plenty of them, and we think Anthem Tax Services is a standout option. Its experienced team specializes in navigating hardship programs and negotiating settlements with the IRS.
Anthem will review your financial situation to determine eligibility for relief options like CNC status or an Offer in Compromise, ensuring your application is accurate and complete. With a reputation for transparency and effective communication, Anthem helps you avoid scams and make informed decisions about your tax debt. Check out our Best Tax Relief Companies guide for more details on why Anthem Tax Services could be the right choice for you.
2. Contact a tax professional
An enrolled agent (EA), certified public accountant (CPA), or tax attorney can also help you apply for hardship relief. Hiring a tax professional may be a good idea if:
- You owe multiple years of back taxes.
- You have a complicated financial situation.
- The IRS has already placed liens or levies on your assets.
3. Use free IRS resources
If you can’t afford professional help, consider these free options:
- The IRS Taxpayer Advocate Service (TAS). Provides free assistance to taxpayers experiencing financial hardship. Call 1-877-777-4778 or visit irs.gov/advocate.
- Low-Income Taxpayer Clinics (LITCs). Offer free or low-cost legal help for qualifying individuals. Find one near you at taxpayeradvocate.irs.gov/litcmap.
If you’re struggling with tax debt, don’t wait. The sooner you take action, the more options you’ll have to resolve your situation.
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