Definition of 'Economic hardship'
A situation where if a taxpayer was to pay their tax liability they would be unable to also pay reasonable basic living expenses. This idea applies only to individuals and sole proprietorships and not corporations. The actual amount of money needed to meet these expenses is determined on an individual basis by the IRS, using data obtained from the United States Departmental of Labor. The values are used to determine what is exempt from IRS levies and liens as well as by the United States Department of Justice in bankruptcy cases.