IRS Updates Collection Financial Standards

The Internal Revenue Service has updated the standard allowable living expenses for use in determining how much a taxpayer can repay on a debt payment plan. In this update, the IRS has added a new category for standard healthcare expenses, has eliminated the separate expense amounts for Alaska and Hawaii, and has updated figures across all expense categories.

The collection financial standards are used frequently when a taxpayer cannot afford to pay his or her taxes in full and is requesting to pay less than the full amount of tax. In my practice, I use these numbers when preparing partial-payment installment agreements and offers in compromise, and when asking the IRS to grant a hardship waiver under their currently not collectible program.

More information:

• IRS Issues Redesigned Allowable Living Expense Standards (IR-2007-163)
• Five Ways to Get out of Tax Debt