In Their Resolution Outline, the IRS Ignores the Hardship Option

When the IRS presents back tax resolution options to the public, why is it that IRS hardship status is not listed and an Internal Revenue Service option? In a recent official publication for taxpayers that outlines ways to resolve back taxes owed, the Internal Revenue Service ignores IRS hardship status as an option. If a taxpayer successfully claims hardship, they can either pay less than what is owed over the time the IRS has to collect (the 10-year collection statute) or possibly pay nothing by being placed into currently-not-collectible (CNC) status. Another option the IRS never discusses with the taxpayer is discharging taxes via a personal bankruptcy.

In their manual, the IRS indicates that their goal is to collect as much as they can from the taxpayer over the collection statute. Assuming the taxpayer does not have the ability to pay, hardship status not only makes sense but ensures the taxpayer can continue to cover their living expenses and pay taxes beyond the minimum. The Tax Resolution Institute not only looks at hardship as an option based on what the taxpayer can pay when an installment agreement is submitted but we also understand that circumstances change, and a current monthly payment may not be feasible in the near future if circumstances change. For this reason, the IRS allows a taxpayer to look back as much as two years to determine how much they make and spend for installment agreement purposes.

If the IRS sets up a taxpayer to fail in their attempt to collect unpaid taxes, nobody wins. In some cases, taxpayers try to show that they are able to pay less than what is actually the case. Because of this, we understand that the IRS must be diligent, but we cannot understand why all taxpayers are punished for the actions of a few.

IRS Emphasized Back Tax Resolution Options

The options to resolve back taxes that the IRS highlights, are in the best interest of the Federal government, and can often leave a taxpayer out in the cold, especially if they qualify for hardship.

The back-tax options that the IRS suggest includes the following…