What "hardship" covers at the IRS
Search for an IRS hardship program and you will find relief companies describing one. The IRS itself describes a handful of separate things, each with its own test. Knowing which one you mean saves time.
| What it is | What it does | Who it is for |
|---|---|---|
| Currently not collectible status | Pauses collection; the balance stays and grows | People who cannot pay anything after basic living expenses |
| Payment plan fee waiver | Waives the setup fee with direct debit, or reduces it to $43 and reimburses it | Individuals with adjusted gross income at or below 250% of the federal poverty level |
| Offer in compromise Low-Income Certification | No $205 application fee, no initial payment, no payments during review | Individuals who meet the guidelines on Form 656 |
| Levy release for economic hardship | Releases a levy that prevents you from meeting basic living expenses | Anyone under an active levy |
| Taxpayer Advocate Service | Free help from an independent office inside the IRS | People facing hardship or a problem the normal channels have not fixed |
| Low Income Taxpayer Clinics | Free or low-cost help with an IRS dispute | People below the income guidelines, usually with less than $50,000 in dispute |
Currently not collectible: the status behind the name
If you cannot pay because of financial hardship, the IRS may place your account in currently not collectible status. It decides this from your finances, and it may ask for a collection information statement on Form 433-F, 433-A or 433-B with proof of income and expenses.
The test is whether anything is left after necessary living expenses. The IRS measures those with its Collection Financial Standards, not with your actual spending in every category. Our page on currently not collectible status explains how the decision is made and how long it tends to last.
What hardship status costs you
The word "hardship" suggests relief. The status is a pause, and the pause has a price.
- The balance is not reduced. Nothing is forgiven.
- Penalties and interest keep accruing until the balance is paid in full. The lower 0.25% failure-to-pay rate applies only during a payment plan, not here.
- The IRS may file a Notice of Federal Tax Lien to protect its interest in your property.
- The IRS may apply your federal tax refunds to the balance.
- The IRS may review your finances later and end the status if your income has risen.
One thing does work in your favor. The collection period, generally 10 years from assessment, keeps running while the account is in this status. For an older balance, that matters. See the ten-year collection period.
Hardship help with fees
If you can pay something, the low-income rules reduce what it costs to set up an arrangement. For payment plans, low income means adjusted gross income at or below 250% of the federal poverty level for the most recent year the IRS has. The setup fee is waived if you pay by direct debit. If you cannot, you pay $43 and get it back when the plan is completed.
For an offer in compromise, the Low-Income Certification removes the $205 application fee and all payments while the offer is under review. The chart is in Section 1 of Form 656. It lowers the cost of applying. It does not change whether the offer will be accepted, which still depends on your equity and income.
Free help if you cannot afford a professional
- The Taxpayer Advocate Service is an independent organization within the IRS. Call 877-777-4778. Our page on the Taxpayer Advocate Service explains when it will take a case.
- Low Income Taxpayer Clinics are independent of the IRS and provide help free or for a small fee. Generally your income must be below a set threshold and the amount in dispute is usually under $50,000.
- The IRS "Get help with tax debt" page has a tool that asks a few questions and lists your options.
How to ask for hardship status
- 1.File any missing returns. The IRS will not consider a collection alternative while a required return is outstanding.
- 2.List your monthly income from every source and your necessary expenses, with a document for each.
- 3.Call the number on your most recent notice and explain that you cannot pay. Be ready to give the figures or send a Form 433-F.
- 4.If a levy is already in place and is causing hardship, say so on the call. See getting a levy released.
- 5.Keep filing and paying current-year tax. New balances undo the arrangement.
Where we come in
A hardship request is decided on a financial statement, so our part is preparing it properly: reading the transcripts for every open year, preparing unfiled returns, working out the collection statute date for each assessment, and assembling the Collection Information Statement with its documents. We then explain in writing whether the figures support hardship status, a payment plan or an offer. If free help fits you better, we will say so. We give you a scope and a price in writing before anything starts.
Figures on this page were checked against the IRS and Massachusetts sources listed alongside on October 1, 2026. They change — confirm the current amount before relying on one.
General information for owner-led businesses, not advice for your specific situation. Tax and accounting rules change, and how they apply depends on facts particular to your business. Talk to us — or to another qualified professional — before acting on anything here.
