TAX DEBT CHANGES – The IRS Changes the Allowable Living Expense Standards Taxpayers effecting all, in status, Offers-in-Compromise, Installment Agreements, and Currently not Collectible Taxpayers
WASHINGTON — The Internal Revenue Service issued the 2007 allowable living expense standards. Allowable living expense standards, also known as collection financial standards, are used to determine the ability of a taxpayer to pay a delinquent tax liability. For purposes of federal tax administration the standards are effective Oct. 1, 2007.
This year the standards have been redesigned to incorporate:• a new category for out of pocket health care expenses• the elimination of income ranges for national standards for food, clothing and other items• a nationwide set of tables for national standard expenses, eliminating separate tables for Alaska and Hawaii• an expanded number of household categories for housing and utilities• an allowance for cell phone costs in housing and utilities• equal allowances for first and second vehicles under transportation expenses• fewer Metropolitan Statistical Areas for vehicle operating costs• a separate nationwide public transportation allowance.
The Allowable Living Expense standards rely on data from the Bureau of Labor Statistics, the Medical Expense Panel Survey and other governmental surveys of actual consumer expenditures and provide a basis for allowances. The IRS adjusts survey data for inflation according to the Consumer Price Index.
It has been indicated that the IRS has aimed at reducing the number of taxpayers who qualify for currently not collectible status. In review of these standards to taxpayers with various income levels, it appears to adversely effect those making over the median income level for their area. Contact a professional tax resolution firm to see how these standards effect your tax debt problem.