An economic difficulty occurs when we have determined that the tax prevents you from covering basic and reasonable living expenses. For the IRS to determine if a lien is causing economic hardship, it will generally need you to provide us with financial information, so be prepared to provide it to you when you call. There is an economic difficulty if a taxpayer cannot afford reasonable basic living expenses. To apply, in most cases, you must provide the IRS with detailed financial information (not always).
You must convince the IRS that you can't pay and that forced collection would cause serious financial difficulties. There are other reasons why the IRS grants CNC status. The difficult economic situation may stop tax collection activity during certain tax years when the taxpayer has an obligation, but the IRS does not grant this status lightly. 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've been working with an IRS representative, you can ask the IRS to mark “situation 53” on your file or apply for “not currently collectable” status. 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. 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.
If you are unable to make any payments at this time, you may be eligible for current non-collectable 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.