How to Keep the IRS From Taking a Refund Due to Hardship

If you owe back taxes but are experiencing financial hardship, the IRS might agree to release your refund rather than applying it toward elimination of your tax debt. You can make a hardship request if your only debt subject to refund offset is federal taxes and if you make the request prior to filing the return for the tax year for which you’re due a refund. The IRS has no authority over non-tax related debts, such as child support or other federal or state agency debts.

Obtain IRS Form 911 from the IRS website. You’ll use this form to request assistance from the taxpayer advocate office. This is an IRS office, but advocates work as an intermediary between taxpayers and the IRS to ensure your concerns are addressed and your case is processed appropriately. This is a free service and you’ll have a direct method to reach your agent, versus using the toll-free IRS call center method of contact. Only taxpayer advocates may process hardship requests for refunds.

Locate the contact information for your local Taxpayer Advocate office in IRS Publication 1546. Submit Form 911 to the local office in person or by fax. The address and fax number for each office is listed in the publication. This opens your case with your Taxpayer Advocate office, and you’ll receive a phone call from your agent when he is ready to start working on your case. Most agents are ready to start your case within two business days of receiving your request.

Prepare IRS Form 433-A. This is a form that the taxpayer advocate uses to determine your financial hardship. You may have an eligible hardship if your monthly bills exceed your monthly income or if you’ve recently experienced a job loss, a reduction in income or increase in expenses, or an addition of dependent family members. You’ll also need documents to support income and expenses claimed on the form. Have this information ready for your advocate when he requests it. You are not required to provide the information with your Form 911 request.

Work with your advocate, who may request additional documents to support your claim and inform you of various stages in the process. Do not file your return until your advocate is through processing your case.

About the Author

With a background in taxation and financial consulting, Alia Nikolakopulos has over a decade of experience resolving tax and finance issues. She is an IRS Enrolled Agent and has been a writer for these topics since 2010. Nikolakopulos is pursuing Bachelor of Science in accounting at the Metropolitan State University of Denver.