If you owe the IRS but cannot afford to pay without falling behind on basic living expenses, you may be able to request Currently Not Collectible (CNC) status, also called IRS hardship status.
If you are struggling with IRS tax debt in Frederick, Gabaie & Associates, LLC can review your finances and help you determine whether hardship status or another tax resolution option makes sense.
Call (410) 358-1500 or contact us to discuss your tax situation.
What Is IRS Hardship Status?
IRS hardship status is the common name for Currently Not Collectible status. The IRS may place an account in CNC status when a taxpayer cannot pay the tax debt without being unable to meet basic living expenses.
The IRS does not simply look at how much you owe. It reviews your overall financial situation, including factors such as:
- Income
- Monthly living expenses
- Bank accounts and other assets
- Real estate and equity
- Vehicles and other property
- Outstanding debts
- Household circumstances
Importantly, CNC status does not erase your tax debt. It temporarily delays collection because the IRS has determined that you cannot afford to pay at that time. Interest and penalties generally continue to accrue.
How Do You Qualify for Currently Not Collectible Status?
There is no simple income cutoff that automatically qualifies someone for hardship status.
Instead, the IRS looks at whether you can pay your tax debt while still covering reasonable basic living expenses. The agency’s internal guidance describes hardship as a situation in which paying the tax would prevent a taxpayer from meeting reasonable basic living expenses.
Your financial circumstances may support a hardship request if, for example:
- Your income has dropped significantly.
- You lost your job or business income.
- Your necessary household expenses have increased.
- You have limited or no equity in your assets.
- You are dealing with substantial necessary expenses.
- Making monthly payments would leave you unable to meet basic needs.
The IRS considers each taxpayer’s circumstances individually. Having a large tax bill alone does not establish financial hardship.
What Financial Information Does the IRS Review?
To determine whether you qualify, the IRS may require detailed financial information.
Depending on your situation, you may need to complete Form 433-F, Form 433-A, or Form 433-B. These Collection Information Statements provide information about your income, expenses, assets, and debts.
The IRS may also request supporting documentation, such as:
- Recent pay stubs
- Bank statements
- Mortgage or rent records
- Utility bills
- Insurance expenses
- Medical expenses
- Vehicle payments
- Business financial records
- Information about investments and other assets
Accuracy matters. If the information provided to the IRS does not accurately reflect your finances, the agency may reach a different conclusion about your ability to pay.
How Does the IRS Decide Whether My Expenses Are Reasonable?
This is often one of the more complicated parts of a hardship request.
The IRS uses collection financial standards when evaluating a taxpayer’s ability to pay. Some expenses are based on national standards, while others use local standards. The IRS’s housing and utilities standards, for example, are broken down by geographic area.
That does not mean the IRS automatically rejects every expense that exceeds a standard. In some circumstances, taxpayers can have expenses above the standard if they can establish that the expenses are necessary or otherwise appropriate under the applicable collection rules.
The IRS updated its collection financial standards effective June 29, 2026, so taxpayers should use current figures rather than relying on older financial worksheets or information found online.
For someone living in Frederick, the local cost of housing and transportation can therefore be relevant when the IRS evaluates financial hardship. But the determination is still based on federal collection rules, not a separate Frederick hardship program.
Can IRS Hardship Status Stop a Wage Garnishment or Bank Levy?
Potentially, yes.
If the IRS determines that you qualify for CNC status, it may temporarily suspend certain collection actions. That can provide relief for taxpayers who are already facing serious collection pressure.
For example, CNC status may help prevent or temporarily stop collection through:
- Wage levies
- Bank levies
- Certain other collection actions
However, hardship status does not automatically erase an existing levy or guarantee that every collection action will immediately stop. The specific circumstances of the account matter.
If the IRS has already levied your wages or bank account, it may make sense to address the levy directly while also determining whether CNC status is appropriate.
Does Currently Not Collectible Mean My IRS Debt Goes Away?
No.
CNC status is a temporary collection status. The IRS can review your financial situation again later to determine whether you can pay.
Your tax debt also continues to accrue applicable interest and penalties while collection is delayed. The IRS may still file a Notice of Federal Tax Lien even while an account is in CNC status.
The IRS generally has a limited period to collect federal tax debt, but that period can be suspended or extended in certain circumstances. For that reason, taxpayers should not assume that hardship status automatically means the IRS debt will disappear after a specific number of years.
The long-term strategy matters.
Is IRS Hardship Status Better Than an Installment Agreement?
Not necessarily. It depends on what you can realistically afford.
If you can make monthly payments without creating a financial hardship, an IRS Installment Plan Agreement may be a better fit.
If you cannot make any payment without falling behind on basic expenses, CNC status may be worth considering.
Other taxpayers may benefit from an Offer in Compromise, which can potentially settle eligible tax debt for less than the full amount owed.
The right choice depends on your finances, the amount and type of tax debt, your assets, and your ability to pay.
What If I Have Unfiled Tax Returns?
Unfiled returns do not necessarily prevent a taxpayer from seeking hardship status, but they can complicate the case.
The IRS may need your filing history brought up to date before it can fully evaluate your situation. In some hardship situations, the IRS may still place accounts in CNC status even when returns are unfiled, but taxpayers generally should address missing returns rather than leave them unresolved.
Can a Business Qualify for IRS Hardship Status?
Yes. Businesses can also have accounts reported as currently not collectible when their financial circumstances prevent them from paying their tax liabilities.
The IRS may request Form 433-B, Collection Information Statement for Businesses, along with business financial records.
For a Frederick business owner, that may mean providing information about:
- Business income
- Operating expenses
- Bank accounts
- Accounts receivable
- Business assets
- Payroll
- Outstanding debts
A business owner should also determine whether unpaid payroll taxes create potential personal liability. A hardship request does not automatically resolve every type of business tax problem.
Why Get Help With an IRS Hardship Request in Frederick?
A hardship request requires more than telling the IRS that you cannot afford your tax bill. The agency may require a detailed financial picture and supporting documentation before deciding whether to delay collection.
Gabaie & Associates represents individuals and businesses dealing with IRS collection problems in Frederick and throughout the area. The firm’s Frederick office is located at 5100 Buckeystown Pike, Suite 250A, Frederick, MD 21704.
An attorney can review your financial information, help determine whether CNC status is appropriate, and discuss other options if the IRS believes you can make some type of payment.
IRS Hardship Status FAQs
How long does IRS hardship status last?
There is no single fixed period that applies to every taxpayer. CNC status generally remains in place while the IRS determines that the taxpayer cannot afford to pay. The IRS may review the taxpayer’s finances again later.
Does IRS hardship status stop interest and penalties?
No. Interest and applicable penalties generally continue while collection is temporarily delayed. CNC status also does not erase the underlying tax debt.
Can I get hardship status if I own a home?
Possibly. Owning a home does not automatically disqualify you. The IRS considers the equity in your assets along with your income, expenses, and overall financial circumstances.
Can I get hardship status if I owe a lot of money?
The size of the tax debt alone does not determine eligibility. The key question is whether you can pay the debt without being unable to meet reasonable basic living expenses.
Can hardship status prevent an IRS levy?
It may temporarily suspend certain collection actions if the IRS approves CNC status. If a levy has already occurred, additional steps may be necessary to address the levy.
Can I qualify for hardship status and an Offer in Compromise?
Hardship can be relevant to an Offer in Compromise, but the two are different collection options. An OIC seeks to resolve eligible tax debt for less than the full amount, while CNC status temporarily delays collection because you cannot currently afford to pay.
Get Help With IRS Hardship Status in Frederick
If paying your IRS tax debt would leave you unable to afford your basic living expenses, you may have options other than trying to pay a bill you cannot realistically afford.
Gabaie & Associates can review your financial situation, explain whether Currently Not Collectible status may be appropriate, and help you evaluate other ways to address your IRS debt.
Are you in Frederick and struggling with IRS tax debt because of financial hardship? Call Gabaie & Associates at (410) 358-1500 or contact the firm online to discuss your options.
