To prove your tax difficulties to the IRS, you'll need to submit your financial information to the federal government. The IRS can accept that you are having financial difficulties (economic difficulties) if you can show that you can't pay or can barely afford your basic living expenses. For the IRS to determine that you are in a difficult situation, it will use your financial collection rules to determine the basic living expenses allowed. 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.
If you have been working with an IRS representative, you can ask the IRS to mark “situation 53” on your file or request to be told that it is currently not taxable. The IRS examines your assets and, if there is no capital in them or if garnishing them to pay your tax obligations creates financial difficulties, you are more likely to get into a situation of financial difficulty. If you're having trouble making ends meet and can't pay your taxes, you may be eligible for a difficult financial situation from the IRS. The IRS financial hardship program is designed to help taxpayers who would not be able to cover their necessary living expenses if they had to pay their tax bills.
If you are unable to make any payments at this time, you may be eligible for current non-collector status, which is a temporary condition that the IRS will deposit in your account until your situation improves or until the time when the IRS has to collect the taxes due (usually 10 years) expires. You must convince the IRS that you can't pay and that the forced collection would cause you serious financial difficulties.
