Writing A Property Tax Hardship Letter

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If you are experiencing financial hardship, which means your finances are affected by something that is beyond your control, you may be able to get some relief by writing to a government agency to ask for some relief on your property taxes. It should be noted, however, that even if your request is accepted because you can genuinely prove your hardship, your debt will not be forgiven. Rather, you will be offered some sort of deferral instead.

Possible Reasons to Allow a Property Tax Deferral

There are some legitimate reasons that are generally accepted for property tax deferral. These include unemployment, activated military personnel, a death in the family, sudden illness or disability, failed business, and separation or divorce. However, it all depends on the state, so you should find out the rules that apply to you specifically before writing your letter. It is also common that there are some special programs for certain demographics such as the elderly and disabled, as well as for other groups of people. Most states offer these programs to:

  1. Those who have owned their property for at least five years
  2. Those who run a nonprofit organization but still have to pay state taxes. If their property is now used for things that state legislature renders exempt, they may apply as well.
  3. Widows and widowers of military veterans with low income
  4. Those over the age of 60
  5. People with a disability that forced them into early retirement because they are no longer able to work.
  6. A natural disaster that has affected an entire geographical area
  7. Long-term occupants
  8. Veterans returning from active duty

How to Write a Property Tax Hardship Letter

When you write your letter, one of the most important things to do is to include all documented evidence for your hardship. Your federal income tax statements, copies of outstanding debts, payslips, and other such documents should all be included. Keep the letter short and to the point, and present only the facts.

If you are granted an exemption on your property taxes, you will have to pay them the following year. Hence, you need to start preparing for this, as you will effectively have a double bill. One way to do this is to speak to your mortgage provider and create an escrow. This means that you pay a little bit more every month, and this money is then held in an account for you in order to pay your taxes. For many, this is a great way to prevent having to pay a large, unmanageable sum at the end of the year. Hence, you may also need to write a letter to your lender in order to explain your situation. However, that should be done after you have heard from the tax office.

Meanwhile, remember that a hardship letter is a formal document. It should be properly written and addressed to the right person. Keep it short and to the point, with references to the pieces of evidence that you supply. Try to avoid becoming emotional, as the tax office is interested in facts, not in feelings.

A Property Tax Hardship Letter Example

{Name}
{Address}
{Phone #}

{Date}

Dear {assessor}:

I am positive that my assessment of {amount} is in error.

I would like to request a review. The parcel number is {number}.

If the amount is based on the property description listed on the Assessor’s Office website, that explains the error. Rather than {square footage/bedrooms/etc.} listed, in actuality {the garage has been torn down/there is only one bathroom/the room sizes are off}.

Here’s a list of other discrepancies between your report and the reality of my property:

{discrepancy}

{discrepancy}

{discrepancy}

As a layperson, I looked at the market value of similar homes and used {source} to calculate the reduced value of the property. Based on this, I believe I owe closer to {amount}.

Attached, please find {appraisal report from my recent refinance attempt} as well as {a letter from my real estate agent listing major repairs I’d need to undertake to make the home sellable}.

Paying {assessed amount} would create a severe hardship to my family. I look forward to the review and a revised bill.

Sincerely,

{Sender Name}

Writing a Hardship Letter to IRS

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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}

Writing A Hardship Letter Wage Garnishment

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There are numerous avenues available to creditors to collect unpaid debt. One of those options if for them to apply for wage garnishment. This means that a percentage of your earnings is taken straight out of your salary and paid to the creditor. This percentage can be quite high, and it can cause significant hardship as well. If this is the case with you, then you may want to consider writing a hardship letter.

Basic Tips for Writing a Hardship Letter Wage Garnishment

This type of letter must be formal, which means it should be typed out, addressed to the right person, in the correct format, and free from spelling and grammatical errors. It should also, in the subject line, include an account number of the debt that is owed, if you have it.

State Your Request

Start your letter by explaining what you are requesting. This would be a cessation of the actions that are currently being taken in order to recover your debt. State that you are in the process of developing a payment plan, which you should attach to the letter. Explin that, while you understand that wage garnishment is an option for the creditor, it would be extremely detrimental not just to you, but also to members of your family.

Provide Details of Your Income and Expenditures

Before you write the letter, you should have prepared a statement of your income and all your expenditures. It should state how much of your income goes to necessary bills, and how much you have left. This statement should be included in your letter. You should also make it clear that you financially support other members of your family, and that the vast majority of your income goes to certain bills, leaving you with a certain amount each month for nonessential expenses. Thus, if a wage garnishment is applied, you would be left with virtually nothing towards the nonessential expenses, and that this could lead to you being declared bankrupt. Do not be afraid to state that bankruptcy would mean that your creditor will not receive any money at all. However, make sure that you don’t state this in a threatening way. After all, it is not their fault that you are in financial difficulties, and you are asking them to do you a favor.

Indicate Your Suggested Debt Repayment Plan

State in your letter that you are aware of the fact that you are not able to keep up with debt payments on your current income but you are doing something to increase it. Make a suggestion for a debt repayment plan and when you expect this to start. Indicate that you are looking forward to hearing back from them as soon as possible.

Make sure you include copies of every relevant document with your letter. Do also keep copies for yourself, and send the letter via registered mail. If you have not heard back from them within one week of your letter being received, make sure to follow up. It is your responsibility to take action if you want to avoid wage garnishment, after all.

Hardship Letter Wage Garnishment Example

{Your Name}
{Your Address}
{Your Phone #}

{Date}

To Whom It May Concern:

I am writing this hardship letter to request a cessation to the actions being pursued by your company in regards to my debt. I am working to create a payment plan that we could agree on, but wage garnishment is extremely detrimental to my current family and financial situation.

I am including a worksheet of my income and how it is distributed to necessary bills. As you can see, I am the sole supporter of a {number} person family. Most of my paycheck goes toward {mortgage, rent, hospital bills, be specific}. This leaves me with {amount} leftover every month for nonessential expenses. If my wages are garnished then this will only further my difficulties and may lead to bankruptcy. If that were the case, I cannot imagine that I will ever be able to repay the charges.

I understand that the current disposable income amount that I have is not enough to keep up with my debt. Therefore I have also included a worksheet detailing a possible debt payment plan that might work for both of us. Please contact me as soon as possible so that we can work something out.

Thank you for your time and consideration.
Sincerely,

{Sender Name}

Writing A Hardship Letter Tax Deferral

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If you are under financial hardship and you are unable to pay for your taxes, one way to get some relief is by writing a hardship letter to the IRS for a tax deferral. Of course, this letter will only be considered if what you have written is genuine and if you can prove it. One of the deferrals you may be eligible for is a one year property tax deferral. That does not mean that you won’t have to pay the tax at all, but rather that you can have a break for one year, paying the missed taxes at a later stage.

Basic Rules for Writing the Hardship Letter

Make sure that your letter is clear, concise, and short. Do not exaggerate your situation, but rather state the facts. Address the letter to your county assessor, which you can obtain through their office over the telephone. Make sure the letter is written formally and that it is free from grammatical and spelling mistakes. Also include photocopies (not originals) of every piece of evidence you want to provide.

Possible Reasons for a Tax Deferral

Each state has its own criteria for accepting or denying such a deferral. However, most will accept failed business, separation or divorce, death in the family, illness or disability, unemployment, and/or activated military personnel, as good reasons. However, it is advisable to check your state’s specific rules and regulations. It is likely that there are specific programs that your state has available, and you need to apply to the one that is most appropriate to your needs.

Possible Programs Applicable for a Hardship Letter for Tax Deferral

The letter you will write will vary depending on the program that is applicable to you. Some of the options are:

  1. Programs for those who have had a mortgage on their current property for at least five years
  2. Programs for nonprofits, who may receive federal but not state tax exemption and who now operate a business that is exempted under state legislature
  3. Programs for veteran widows and widowers with low incomes
  4. Programs for people over the age of 60
  5. Programs for individuals who are retired due to a disability
  6. Programs for those whose home has been damaged by natural disaster
  7. Programs for long term occupants
  8. Programs for returning veterans

Whichever program you apply for, you will need to include documented evidence of your situation. This will usually include your federal income tax statement, your paychecks, copies of any outstanding debt, and your general monthly bills.

What to Do If Deferral Is Approved

If the IRS grants you the deferral, you must start to prepare yourself for next year. This is because, at that point, you will not only have to pay your regular taxes, but also the taxes from the year that you have missed. Should you find yourself in difficulty for several years in a row, then it is likely that you will be asked to enter into an escrow arrangement, which can be done through your mortgage provider. This means that you pay slightly more every month to your lender, who will then make the property tax payments. This means that you don’t have to pay a huge sum in one payment.

Hardship Letter Tax Deferral Example

{Your Name}
{Your Address}
{Your Phone #}

{Date}

To Whom It May Concern:

I am writing this letter to explain why I am unable to pay my property taxes this year. I have recently fallen upon difficult times financially and would like to request a deferral.

In the last few month my financial situation has become dire due to {the loss of my job, an illness, a death in the family, be specific}. I am no longer to pay for {medical bills, mortgage, etc.} and I am concerned that I will have to {foreclose, file for bankruptcy, etc.}

I am not attempting to avoid paying my necessary debt to society, and I understand that I will owe these taxes next year. I would just like to explain that I am in an unusually difficult position this year and require the deferral in order to get back on my feet.

I am attaching my federal income tax return from last year, as well as my credit card bill from the last two months. I hope they make my position clear.

I appreciate your time and consideration. I look forward to hearing from you soon concerning this matter.

Sincerely,

{Sender Name}