Undue hardship

Tax Glossary Definition

Undue hardship

Undue hardship refers to a situation where paying taxes by the due date would cause a taxpayer significant financial difficulty. Demonstrating undue hardship is often required to request an extension for tax payment.

Example: A small business faces unexpected equipment repairs that deplete its cash reserves. Paying the full tax liability on the due date would leave the business unable to operate. The taxpayer can request an extension citing undue hardship.

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