Educational Tax Tip: Understanding the IRS “Economic Hardship” Standard for Relief

Have you ever wondered what the IRS means by “economic hardship” when requesting tax relief? The IRS considers a taxpayer to be in economic hardship when paying a tax debt would prevent them from meeting basic living expenses such as housing, utilities, food, or medical care. This standard is often used to qualify for relief options like Currently Not Collectible (CNC) status, levy releases, or certain payment arrangements, and it’s evaluated based on your income, necessary expenses, and available assets using IRS financial guidelines. Proper documentation is critical, as the IRS will closely review whether your situation truly limits your ability to pay.

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