Owing Back Taxes to the IRS When You're On Welfare

Owing Back Taxes to the IRS When You're On Welfare

If you owe the IRS back taxes and you’re unable to repay, you may qualify to make monthly payments through an Installment Agreement with the IRS. You may also qualify to settle your back taxes for less through an Offer in Compromise.

What if I am on welfare and cannot afford to make any monthly payment to the IRS?

You are not alone. Millions of Americans who owe back taxes find themselves in a position where making any payment or monthly payment through an Offer in Compromise or Installment Agreement would create a hardship leaving them unable to meet their monthly living expenses.

If you are on welfare, the IRS may place your account in a Currently Non-Collectible Status (CNC) otherwise known as a “Hardship Status.”

What does Hardship Status this mean?

This means that the IRS will suspend all collection activity on your account until you are able to make a payment toward your account. Interest will still accrue. The IRS will review your account (usually every 2 years) to see if your financial snapshot has improved.

If in the interim, you are enjoying an increase in income, you can always seek an Offer in Compromise or an Installment Agreement with the IRS even if you are in CNC status. If you file a tax return which shows an increase in income, the IRS may want updated financials from you sooner.

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