If you owe back taxes and are unable to pay them because of your current economic situation, you may be eligible for the IRS state of economic hardship, technically known as a currently non-taxable state. The IRS doesn't always grant a tax extension for economic hardship, but that doesn't mean the taxpayer should give up minimizing debts, charges, and tax penalties. The IRS rules on difficult living conditions state that CNC codes can only be used for “individual or joint IMF assessments”, sole proprietorships, partnerships where a general partner is personally liable, and limited liability companies where an individual owner is identified as a responsible taxpayer. You may qualify for the IRS financial aid program if you can't pay taxes after paying basic living expenses.
Once eligibility is determined, taxpayers may find IRS Form 433-A useful, as it contains the necessary information that the IRS will look for. Once the taxpayer is sure that they are eligible to request an extension of the payment for economic hardship from the IRS, it is important to know that the extension process is the next step. You must convince the IRS that you can't pay and that forced collection would cause serious financial difficulties. The difficult economic situation may stop collection activity during certain tax years in which the taxpayer has an obligation, but the IRS does not grant this situation lightly.
These programs are much easier to qualify for than the IRS program for people with financial difficulties, and they require much less personal information. In other words, the CNC IRS program isn't usually intended for most large businesses, but rather for individual taxpayers and small business owners. If you can't pay your new taxes, you can ask the IRS to pay for financial difficulties during that tax period, but this will become more and more difficult every year. If you can't pay your tax bill because you only have enough money to survive after supporting your family, you may be able to take advantage of hardship payments from the IRS.
If you have some taxes included in the IRS program for people with financial difficulties, but you want to pay current back taxes, there are options. If you've been working with an IRS representative, you can ask the IRS to check the “status 53” option on your file or request to be told that it's not currently taxable. Every year, under the IRS program for people with economic difficulties, the government will send you an email telling you how much you owe in taxes. If you're having financial difficulties and owe taxes, consider taking the steps below to work with the IRS to settle your debt.
The IRS will review taxpayer information every two years to ensure that they still qualify for tax difficulties.
