IRS & Tax Hardship Letters

Writing a Hardship Letter to IRS

The Internal Revenue Service (IRS) may, at times, look at a taxpayer’s debt ratio. If they deem it necessary, they may delay account collection for that particular person. This is a “currently not collectible” type of action, and one that you can request by writing a hardship letter to them. The debt will never be forgiven or erased, but they will agree that you are not currently capable of paying what is owed. To prove this, you will have to write a hardship letter and provide evidence of your inability to make payments. However, remember that interest and fees will continue to be charged on what you owe.

Checklist for Writing a Hardship Letter to the IRS

Below is a checklist of the things that you should and should not do in terms of writing a hardship letter:

  1. Fully highlight your personal circumstances. The IRS wants to have a full understanding of why you are in hardship. Perhaps you are a self-employed individual and your business has failed, which in turn means you cannot pay your taxes. Perhaps you have a partner who has experienced a serious medical problem, such as an accident, which substantially reduced your earnings. This type of information should all be given to the IRS with as much detail as possible. Do not exaggerate, however. You should simply provide the facts.
  2. Make sure you include all relevant documentation. These include three months’ wage statements, three months’ bill statements, doctors’ letters, three months’ bank statements, a landlord or mortgage company letter, your last tax return, and any other financial documentation.
  3. Indicate identifying information. These include your IRS location, the agent’s name, the year for which you are applying for hardship, your contact information, your Social Security number, your legal name, and so on.
  4. Always include Form 433 and any other form that applies to the situation you are in. Three forms are included as part of Form 433: (a) Form F, which is for individual tax payers; (b) Form A, which is for self-employed individuals; and (c) Form B, which is for businesses.
  5. Always be polite. The IRS is a massive organization, but cases are handled by individual collectors. They do not like rude language or aggressive demands. Remember that you are asking them for a favor.
  6. Never be vague. Do not say, for instance, that you have “some unexpected financial difficulties that will likely end soon”. Rather, highlight what the financial difficulties are, how they have impacted you, and exactly when you expect them to be over.
  7. Try not to get emotional. What matters to the IRS are the numbers, dates, and other facts. They don’t want to know how you feel.

If you do find that you are in financial difficulties that are making it impossible for you to pay your tax due, then you should consider seeking some professional advice. Taxes are very complex, and the IRS is quite an intimidating agency. Hence, if you aren’t 100% sure about what you are doing, ask a professional who is experienced in these matters to help you.

Hardship Letter to IRS Example

{Your Name}
{Your Address}
{Address Continued}
{Your Phone Number}

{Internal Revenue Service}
ATTN: {appropriate department}
{Address}
{Address Continued}

{Date}

To Whom It May Concern:

I am writing to attempt to stop a bank levy that the IRS is ready to impose on my account(s).

I have experienced a great deal of financial hardship lately, due to {details of the hardship that have made it impossible for you to pay the taxes due to the IRS}.

If the IRS continues with this plan to freeze my account(s), I will not be able to meet the basic standards of living. I have attached my most recent pay stubs {along with other relevant information} to illustrate the fact that I simply do not make enough money to be able to afford to have my account(s) frozen.

I am requesting {a payment plan, a settlement negotiation} in lieu of the levy. Please contact me as soon as possible so that we can work on getting this resolved.

Sincerely,

{Sender Name}

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