What should I do about tax debt during a medical hardship?
A serious illness can be a reasonable cause to remove late filing or late payment penalties. If you can't cover basic living costs, the IRS may pause collection or release a levy for hardship.
Reasonable cause is decided case by case. You must show you used ordinary care and still couldn't file or pay on time.
The IRS must release a levy if it keeps you from paying basic, reasonable living costs.
If you take a retirement withdrawal before 59 and a half, medical costs over 7.5% of your income may avoid the 10% extra tax.
Key facts
- Dates of the illness and the missed deadlines
- Records from doctors or hospitals
- Your monthly basic living costs
- Any active levy
- Any early retirement withdrawals
Options that may help
Ask for reasonable cause relief by phone or with Form 843.
Call the number on the levy notice right away.
A pause in collection while money is too tight.
Results depend on your situation. Not every case qualifies.
Common questions
Is lack of money a reasonable cause?
Not by itself. Other facts that show you tried to comply may help.
Do penalties stop in CNC status?
No. Penalties and interest keep adding up until you pay in full.
Sources
General information, not tax or legal advice. You can contact the IRS yourself for free at irs.gov.
