What Qualifies as an IRS Hardship and How to Apply

You qualify for IRS hardship status when a detailed financial review shows that paying your federal tax debt would leave you unable to cover basic living expenses like food, housing, healthcare, and transportation. When the IRS agrees, it places your account in Currently Not Collectible (CNC) status and stops active collection actions such as wage garnishments and bank levies.¹ The debt itself doesn’t go away. The IRS just steps back until your finances improve. Whether you qualify comes down to how your income and assets compare against government-set expense allowances.

What CNC Status Gives You and What It Doesn’t

CNC is a pause, not forgiveness. You remain liable for every dollar, and penalties and interest keep accruing the whole time your account is suspended.² What changes is that the IRS stops trying to take your money through levies, garnishments, or asset seizures.

One collection tool CNC does not turn off: the Notice of Federal Tax Lien. The IRS can still file or maintain a lien on your property while your account is in hardship status, and that lien is a public record that attaches to your real estate and can complicate credit, home sales, and loans.¹

A separate program, the Offer in Compromise, can actually settle a debt for less than the full amount on hardship grounds. That’s a different application with different rules. If your goal is to stop collection while your finances are tight, CNC is the request you’re looking for.³

How the IRS Measures Whether You Qualify

The IRS doesn’t take your word for what you need to spend each month. It uses standardized expense allowances called Collection Financial Standards that cap how much you can claim in each category. Anything you spend above those caps gets treated as disposable income the IRS expects you to put toward the tax debt. The current standards took effect April 21, 2025 and remain in place until June 2026.⁴

National Standards

Food, clothing, and personal care items fall under a single national allowance that applies regardless of where you live. For a one-person household, the monthly figures are $497 for food, $93 for clothing, and $154 for miscellaneous personal expenses, totaling $744.⁵ Larger households get proportionally more. If you spend more than the allowance, the IRS adds the difference back into your disposable income calculation.

Out-of-pocket healthcare costs have their own national number: $84 per month per person under 65, and $149 per month per person 65 and older.⁶ Health insurance premiums are handled separately based on what you actually pay.

Local Standards

Housing, utilities, and transportation allowances vary by county to reflect regional costs. The IRS publishes county-level housing tables and separate transportation limits for vehicle ownership and operating costs.⁷⁸ Where you live can substantially shift what you’re allowed to claim.

Necessary vs. Conditional Expenses

The IRS separates expenses into two buckets. Necessary expenses are those required for your health, welfare, or ability to earn income. Everything else is conditional, and the IRS generally won’t count it against your disposable income.⁸ Credit card minimum payments usually don’t count as necessary. There’s a narrow exception for people who qualify for the six-year full-pay rule on an installment agreement, but for a straight CNC hardship request, expect the IRS to disregard most consumer debt payments.⁴

How Home Equity and Other Assets Factor In

Owning a home or a vehicle with equity doesn’t automatically disqualify you. The question is whether liquidating the asset is realistic and whether doing so would still leave you able to meet basic needs. Equity in a modest home that has been specially modified for a disability, for example, carries weight in favor of hardship.³

There is no fixed equity cutoff. If your housing costs already fall within the allowable local standard and you have substantial home equity, the IRS may expect you to downsize or borrow against it. The analysis is case-specific, which is why documenting your circumstances thoroughly matters.

Forms and Documents You’ll Need

Every hardship request runs on a collection information statement. Which form you file depends on your situation:

Form 433-A is the full statement for wage earners and self-employed individuals. It covers assets, income sources, and monthly living expenses in detail.⁹
Form 433-F is a shorter version gathering similar information for less complex situations, and is often used when a revenue officer walks through the finances by phone.¹⁰
Form 433-B is required if you own a business structured as a partnership, LLC, or corporation.⁹

Supporting documentation is what makes the numbers credible. Plan to send three months of personal bank statements (six months for a business), recent pay stubs showing gross income and deductions, proof of housing costs such as a mortgage statement or rent receipt, utility bills, and documentation of medical expenses or court-ordered obligations like child support.¹¹ The IRS compares every figure on your form against those documents and against the Collection Financial Standards. Gaps between what you claim and what your statements show can sink the request.

How to Request Hardship Status

The process usually starts with a phone call to the number on your most recent IRS notice or the general collections line, or with a conversation with a revenue officer already assigned to your case. You explain your financial situation, and the IRS tells you which form to complete. In many cases the financial review happens right there on the phone using Form 433-F.

Once your form and documents are in, the IRS typically suspends active collection while a specialist reviews everything.¹ Review can take several weeks. If approved, you’ll get a letter confirming CNC status. One requirement that trips people up: the IRS generally expects all your tax returns to be filed before granting CNC, though hardship cases can receive exceptions.¹²

What Happens After Approval

The 10-Year Clock Keeps Running

Federal law gives the IRS 10 years from the date a tax is assessed to collect it. That deadline is called the Collection Statute Expiration Date, or CSED.¹³ CNC hardship status by itself does not pause the clock.¹⁴ The time continues to run while your account sits in suspended status. If your finances never improve and the 10 years expire, the IRS can no longer legally collect. Some other actions do pause the CSED, including filing an Offer in Compromise, requesting a Collection Due Process hearing, and filing for bankruptcy, so be aware that those alternatives can extend the deadline even when they offer other benefits.

Passport Protection

Large tax debts can be certified to the State Department as seriously delinquent, which can lead to passport denial or revocation. The IRS will not certify a debt while your account is in CNC status due to hardship.¹⁵ If your debt was already certified before approval, that certification should be reversed.¹⁶

How the IRS Watches Your Income

CNC status is not permanent. Every hardship account is assigned a closing code from 24 to 32, and each code corresponds to an annual income threshold:

Code 24: $20,000
Code 25: $28,000
Code 26: $36,000
Code 27: $44,000
Code 28: $52,000
Code 29: $60,000
Code 30: $68,000
Code 31: $76,000
Code 32: $84,000

The IRS picks your closing code based on your allowable expenses at the time of approval. Each year, when you file a return, the agency automatically compares your total positive income against the threshold for your code. If you cross it, your account is reactivated and collection resumes.² At that point you’ll need a payment arrangement or fresh proof that hardship still applies despite the higher income. Ask the revenue officer which closing code was assigned so you know your reactivation threshold.

You also need to stay current going forward. File on time, and don’t let new balances pile up; new unpaid tax can trigger a full reconsideration of your CNC status.¹²

If You’re Denied

You have formal appeal rights if the IRS turns down your hardship request or takes a collection action you believe is wrong.

The Collection Appeals Program (CAP) is the faster route and covers a broad range of collection disputes, including proposed levies and lien filings. File Form 9423 with the collection office that sent your letter, after discussing the issue with a collection manager. A CAP decision cannot be taken to court.¹⁷
A Collection Due Process (CDP) hearing is triggered by a Notice of Federal Tax Lien filing or a final notice of intent to levy. You have 30 days to request one using Form 12153. Unlike CAP, a CDP decision preserves your right to petition the Tax Court.¹⁷

If neither appeal resolves it and you’re facing genuine hardship from IRS collection actions, the Taxpayer Advocate Service can sometimes intervene. Request assistance by filing Form 911. TAS is an independent organization within the IRS focused on taxpayers experiencing financial difficulty caused by IRS action or inaction.¹⁸

When to Bring In a Professional

Plenty of taxpayers handle CNC requests themselves, especially when the picture is simple: low income, few assets, expenses inside the national standards. Cases get harder when you own a business, hold real estate equity, have retirement accounts, or owe for multiple years. A tax attorney or enrolled agent can help when the IRS pushes back on your expense claims or when you’re weighing CNC against an Offer in Compromise. Representation typically runs from a few thousand dollars to $10,000 or more for complex cases, so measure that cost against the size of your debt and how likely you are to resolve it on your own.

1
Internal Revenue Service. Topic No. 201, The Collection Process
2
Internal Revenue Service. IRM 5.16.1 Currently Not Collectible
3
Internal Revenue Service. IRM 5.8.11 Effective Tax Administration
4
Internal Revenue Service. Collection Financial Standards
5
Internal Revenue Service. National Standards: Food, Clothing and Other Items
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Internal Revenue Service. Allowable Living Expenses Health Care Standards
7
Internal Revenue Service. Allowable Living Expenses Housing Standards
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Internal Revenue Service. IRM 5.15.1 Collection Financial Analysis
9
Internal Revenue Service. Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals
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Internal Revenue Service. Form 433-F Collection Information Statement
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Internal Revenue Service. Form 433-A (OIC)
12
Internal Revenue Service. IRM 5.19.17 Campus Procedures for Currently Not Collectible
13
Office of the Law Revision Counsel. 26 U.S. Code 6502 – Collection After Assessment
14
Internal Revenue Service. IRM 5.1.19 Collection Statute Expiration
15
Internal Revenue Service. Revocation or Denial of Passport in Cases of Certain Unpaid Taxes
16
Internal Revenue Service. Understanding Your CP508R Notice
17
Internal Revenue Service. Preparing a Request for Appeals
18
Taxpayer Advocate Service. Submit a Request for Assistance