Top Reasons Businesses Apply For IRS Hardship Assistance And How To Qualify

In the dynamic world of business, financial hardships can come unannounced. Companies, regardless of their size, can sometimes find themselves in a predicament where they face considerable tax obligations that can severely strain their financial resources. Fortunately, the Internal Revenue Service (IRS) recognizes these challenges and offers hardship assistance programs for businesses. But what are the reasons behind businesses seeking this assistance, and how can one qualify? 

In this blog post, we will delve into the top reasons and offer insights into the qualification process.

1. Severe Financial Constraints

For many businesses, unexpected financial crises can drastically impact their ability to settle tax obligations. These crises could be due to sudden market changes, unforeseen expenses, or even global events such as a pandemic. Businesses might struggle with dwindling revenues, prompting them to prioritize other expenses over tax obligations. 

In such scenarios, the Tax Law Advocates process can provide significant relief. By offering businesses a systematic way to address and communicate their hardship with the IRS, they can work towards favorable resolutions that consider their financial constraints.

2. Economic Downturns

Business cycles are a natural phenomenon in any economy. During downturns, some industries, especially those termed as non-essential, can suffer significant setbacks. During these times, even solvent companies might experience reduced cash flows, leading to difficulty in settling tax obligations. 

Recognizing this, the IRS often provides flexibility in payment options, ensuring businesses can rebound once the economy improves.

3. Sudden Operational Disruptions

Business continuity can be jeopardized by various unexpected events – from natural disasters to cyber-attacks. These disruptions can quickly drain a business’s finances, as they rush to recover data, rebuild infrastructures, or replace lost inventory. 

With primary attention diverted to restoration, tax payments might take a backseat, prompting businesses to seek IRS hardship assistance.

4. Legal Obligations Or Lawsuits

Sometimes, a business might find itself embroiled in a lawsuit or other legal proceedings. The financial implications of legal battles, even if the business is on the winning side, can be significant. Settlements, legal fees, and other related costs can consume a substantial portion of a company’s funds. 

In such scenarios, IRS hardship assistance can be a lifeline, allowing the business to address its immediate legal concerns without the added burden of full tax payments.

5. Debt Obligations

Having multiple debt obligations can significantly strain a business’s finances. Whether it’s repaying business loans, vendor payments, or settling credit, these financial responsibilities can affect the ability of the company to pay its taxes. 

In recognizing the intricate balance between honoring debt and tax obligations, the IRS hardship assistance can offer reprieve and payment flexibility.

6. Business Restructuring Or Mergers

Mergers, acquisitions, and restructuring can be complex and expensive endeavors. These processes often involve a thorough review of finances, assets, liabilities, and even potential layoffs. 

The accompanying costs and the transitional phase can affect a business’s ability to promptly settle its tax obligations. By applying for IRS hardship assistance, companies can ensure they navigate these transitions without added financial stress from taxes.

How To Qualify For IRS Hardship Assistance

  • Document Financial Hardship: The primary requirement for any business seeking hardship assistance is to prove genuine financial distress. This involves presenting financial statements, outstanding debt details, and any other relevant documentation.
  • Seek Professional Assistance: To ensure that the hardship application is well-prepared and convincingly presented, businesses should seek help from tax professionals. These experts can guide through the nuances of the application process and ensure that the case stands the best chance of approval.
  • Engage with the IRS: Open communication with the IRS is crucial. Keeping them in the loop about the business’s financial situation, future prospects, and intentions can go a long way in gaining their trust and empathy.
  • Adhere to Deadlines: Even if facing financial hardship, it’s essential to file all tax returns on time. The IRS is more likely to assist businesses that demonstrate compliance and responsibility.


Financial hardships are an inevitable part of the business landscape. While tax obligations are crucial, there are times when businesses genuinely struggle to meet these commitments. Fortunately, the IRS recognizes these challenges and offers pathways for assistance. 

By understanding the primary reasons businesses seek help and the qualification process, companies can navigate these rough waters with greater confidence and hope for a brighter financial future.


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