Quick summary

Hardship relief during IRS collections allows taxpayers to ask the IRS to slow or stop collection activity when paying tax debts would cause an undue hardship on basic living expenses. Common outcomes include Currently Not Collectible (CNC) status, installment agreements (including partial-payment plans), temporary delay, and, in narrow cases, an Offer in Compromise. The IRS evaluates these requests using a financial statement and supporting documents—most commonly Form 433-F (Collection Information Statement). IRS guidance explains payment options and hardship procedures.

When should you consider applying for hardship relief?

  • You cannot afford essential living costs (housing, food, utilities, transportation, medical care) after paying taxes.
  • You’ve lost a job, experienced a major medical event, or suffered a disaster that sharply reduced income.
  • You’re facing levy or wage garnishment and need time to stabilize your finances.

If one of these situations fits, submitting a clear financial statement to the IRS can stop or slow collection while the agency reviews your case.

What types of hardship relief are available?

  • Currently Not Collectible (CNC) status: The IRS temporarily suspends collection activity when you can’t pay anything toward tax debt without undue hardship. Interest and penalties generally continue to accrue; CNC doesn’t erase the debt. See the IRS page on collection alternatives for details.

  • Installment agreements: You pay over time. There are streamlined agreements for smaller balances and partial-payment installment agreements (PPIA) for taxpayers who can only afford reduced monthly payments. The IRS accepts many installment agreements online (Form 9465 is often used).

  • Offer in Compromise (OIC): If you can’t pay the full amount and meet strict criteria, the IRS may accept less than the full balance. OICs require a thorough financial package and are approved only when collection of the full amount is unlikely. See IRS Offer in Compromise guidance and the documentation requirements.

  • Temporary forbearance / delay: The IRS may grant a short-term suspension while you collect documents, appeal a decision, or recover from a crisis.

Note: Penalties and interest may continue in most situations; an Offer in Compromise or penalty abatement are the only options that can reduce the total owed.

Step-by-step: How to apply (practical checklist)

  1. Read the IRS guidance first. Start at “If You Cannot Pay Your Tax Bill in Full” on IRS.gov to confirm options and current procedures: https://www.irs.gov/payments/if-you-cannot-pay-your-tax-bill-in-full.

  2. Gather key documents:

  • Recent pay stubs, proof of unemployment, or business profit-and-loss statements.
  • Bank statements (60–90 days).
  • Monthly bills for rent/mortgage, utilities, medical, insurance, child care, transportation.
  • Proof of assets (titles, recent statements for retirement accounts—note retirement accounts may be protected in CNC evaluations but still considered).
  • Any documentation about extraordinary expenses (medical bills, disaster losses).
  1. Complete the correct financial statement:
  • Form 433-F (Collection Information Statement) is the IRS’s general financial statement used in many collection cases. It asks for monthly income and allowable living expenses and is the primary form examiners use to evaluate CNC and installment options. See “About Form 433-F” on the IRS site: https://www.irs.gov/individuals/about-form-433-f.
  • If you apply for an Offer in Compromise, use Form 656 and the OIC Package; the IRS requires a more detailed disclosure and a nonrefundable application fee unless you qualify for a low-income exception.
  • To request a standard installment agreement you can use Form 9465 or request online for eligible taxpayers.

  1. Submit your paperwork to the IRS contact shown on your collection notice or to the IRS office handling your case. If you’re working with a Revenue Officer, send documents to that officer and follow up by phone.

  2. Be truthful, complete, and prompt. Missing or inaccurate figures are the main reason applications are delayed or denied. If a Revenue Officer asks for follow-up paperwork, provide it within the requested timeframe.

  3. Keep records of everything sent: date, method (fax, secure portal, certified mail), and a copy of the document. In my practice I instruct every client to keep a single organized packet (digital + physical) so follow-ups are fast and precise.

  4. Continue to file tax returns on time and make any required installment payments for new tax liabilities. Failure to stay current with filing and future taxes can void a pending relief decision.

What to expect after you apply

  • Response time: Typically 30–60 days, but complex cases (Offers in Compromise or multiple years of returns) can take longer.
  • Collection actions: Depending on the facts, the IRS may temporarily pause aggressive actions (like levies) while it reviews your financial statement, but this is not guaranteed. CNC status explicitly pauses collection activity.
  • Interest & penalties: These usually continue to accrue unless the IRS grants specific abatement or you obtain an OIC that includes a reduction.

Professional tips from practice

  • Start early. Don’t wait until the IRS issues a levy. Proactive communication makes a big difference.
  • Be precise with living expenses. The IRS uses allowable collections standards; list only essential expenses and document them. Overstating expenses reduces credibility.
  • If your case is complex (business losses, bankruptcy, multiple tax years), get professional help. Tax pros can assemble a cleaner package and avoid common mistakes that cause delays.
  • Consider alternatives in parallel: a streamlined installment agreement, a PPIA, or preparing an Offer in Compromise pre-qualifier to see if OIC is viable. See our guide to Streamlined Installment Agreements for when an installment plan is a better fit.
  • If you believe collection actions are incorrect or abusive, contact the Taxpayer Advocate Service (independent IRS organization) for help.

Common mistakes and misconceptions

  • “I have any income, so I can’t qualify.” False. Eligibility rests on whether your essential expenses exceed your income or whether your realistic ability to pay is below what the IRS can collect.
  • “Submitting forms stops everything immediately.” Not always. The IRS will consider your submission, but unless the revenue officer explicitly confirms a pause, collection steps may continue.
  • “I can’t apply without a lawyer.” You can apply yourself; many taxpayers succeed with clear documentation. But professionals can be helpful for complex claims.

Examples (anonymized, from practice)

  • Job loss: A client who lost employment and had high medical bills provided a completed Form 433-F and bank statements; the IRS placed the account in CNC for a year while the client sought new work. Collections stopped; penalties and interest continued but the client gained breathing room.

  • Small business disaster: After local flooding reduced revenue, a small-business owner negotiated a modified installment plan while the IRS reviewed his financials. The payment amount was reduced temporarily until revenues recovered.

These stories are typical: the IRS responds to clear, honest, and well-documented requests.

If your request is denied

  • You can appeal. Collection appeals or an independent review by the IRS Appeals Office are options.
  • Fix gaps in documentation and reapply. If you were denied for incomplete information, correct the record and resubmit promptly.

How relief can interact with other relief programs

  • Offer in Compromise vs CNC vs Installment Agreement: OIC may reduce the amount owed but is hard to qualify for. CNC pauses collection but does not reduce the balance. Installment agreements let you pay over time and may be the fastest path to stop aggressive collection.
  • For more on choosing between options see our explainer on Offer in Compromise: Qualifying, Applying, and Pitfalls.

Frequently asked questions

Q: Will applying for hardship relief stop tax liens?
A: No. A tax lien records the government’s legal claim; a lien may remain even if you’re in CNC. Collection actions like levies can be suspended in CNC, but liens usually remain until the debt is resolved.

Q: How long does CNC last?
A: CNC status is reviewed periodically; the IRS may request updated financial information to determine whether your ability to pay has changed.

Q: Will applying hurt my credit?
A: Relief requests don’t directly affect your credit score. However, public tax liens (if filed) can appear on credit reports and damage credit until resolved.

Practical next steps (one-page action plan)

  1. Pull the current IRS notice and calendar the due dates.
  2. Gather 3 months of bank statements, pay stubs, and essential bills.
  3. Complete Form 433-F and any required local or case-specific forms.
  4. Submit documents to the contact on your IRS notice (or to the Revenue Officer handling the case).
  5. Follow up if you do not receive an acknowledgement within 30 days.

Authoritative sources

Internal resources on related relief options

Professional disclaimer

This article is educational and reflects common IRS procedures as of 2025. It is not legal or personalized tax advice. For decisions about your specific tax case, consult a qualified tax professional, enrolled agent, or attorney.