Dec 1, 2007

Your IRS Tax Debt - Currently Not Collectible may be tougher

After the recent IRS changes in the Allowable Living Standards, a “currently not collectible” status may be tougher depending on your income range.

Facts and circumstance of your particular financial situation always dictate the final answer. However, your median income may tell you the answer (see your median income in the last census report).

In general, if you are below the median income level for your area, your monthly disposable income (the amount the IRS wants you to pay each month) will decrease. Thus, you will pay less.

If your income is around the median income, all other things normal, you will have about the same ability to pay the IRS.

If your income is higher than the averages,the IRS will most likely want you to pay more, even though your current financial situation has not improved.

Changes in the standards for ALS eliminated the increased allowable expenses for income brackets. Thus, the standards for a 4 person household for a family with an income of $40,000 annually is the same as the family with $150,000 in income annually.

The IRS is getting tougher on currently not collectible and the standards are getting to the income brackets above the median income level.

Also, it is not yet clear on whether the IRS will backdate these standards to taxpayers and question their currently not collectible status.

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