Trying to manage lots of tax debt can be extremely stressful, overwhelming, and emotional. This is especially true if you’re experiencing a hardship that gets in the way. Common hardships may be a disaster that’s out of your control, like a hurricane or wildfire, or a financial hardship that impacts your ability to pay tax debts on time. The IRS enforces tax regulations on the federal level, but each state also has its own set of laws about taxes. Taxpayers may be eligible for relief programs at both the state and federal levels if they’re having an issue paying the taxes they owe or are experiencing a severe hardship. State tax relief hardship programs generally allow eligible taxpayers who have gone through a natural disaster or crisis in that state to avoid getting penalties from the IRS if they’re unable to pay
. The IRS, a federal entity, created these programs, even though they can vary across states according to their own laws.
There are also a few other options, including payment agreements with the IRS, status changes, and credits, that provide much-needed tax relief during a hardship. This guide will cover who may qualify for a state tax relief hardship program and four ways you may be able to resolve your tax debt with the IRS.