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How to Qualify for the IRS Uncollectible (Hardship) Status, if You Are Unable to Pay Your Tax Bill

If you owe the IRS and are unable to settle your tax bill because you do not have the resources to do so; don’t panic, there might be a way out – the IRS could declare you “Uncollectible.”

In order to be declared uncollectible by the IRS, you will have to prove to the IRS that if they were to collect the tax that is owed to them it would create unfair economic hardship for you. The IRS doesn’t necessarily have a set formula for declaring individuals uncollectible, and will consider each person on a case by case basis; so there is no guarantee, but it’s worth a try.

The IRS will evaluate individuals to see if further collection of taxes from them would create economic hardship, and will probably look at a specific factor or a number of factors combined to determine if you indeed qualify for this status.
The IRS would probably ask these questions: If they were to collect the taxes you owed, would you would you be able to:

  • Provide adequate food for yourself
  • Pay your mortgage or rent
  • Keep your utilities running
  • Transportation yourself to and from work, so that you can keep your job
  • Obtain any necessary medical treatment needed

If you can prove that you are unable to meet these basic needs, you might have a chance of being declared uncollectible by the IRS. In order to obtain this status, however, you will be required to submit some IRS forms and lots of personal financial information to the IRS, outlining your financial situation.

Once the IRS approves, then this will temporarily stop collections. The IRS will follow up several months later to see the financial situation has improved enough in order to start collections again. Please note that this status won’t solve your tax problem, but it will buy you a little more time to deal with it.

The primary objective of these articles is to empower you with basic income tax knowledge, which would enable you to do your own taxes if you so desire. For comprehensive guidance on how to report your income, and on how to claim ALL your tax credits and deductions, grab yourself a copy of “Doing Your Own Taxes is as Easy as 1, 2, 3,” on Amazon.com

Milton G Boothe

Milton G Boothe

Milton G Boothe an IRS Enrolled Agent, and a British certified Chartered Accountant with over twenty years of tax and financial accounting experience.

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