Tax Relief Blog

The IRS uses the Collection Financial Standards to help calculate your ability to pay a back-tax liability.These limits on monthly living expenses play a significant role in your ability to qualify for the Offer in Compromise settlement program and your Offer amount.  The Standards are revised each year around the end of March.

Quick IRS Offer in Compromise Tip

If you’re preparing your OIC for submission toward the end of March, consider waiting a week or so before sending it to the IRS.  It ma...

Where a lot of taxpayers get into a difficult spot when trying to pay back an IRS tax debt is with their housing expense.  The IRS has placed a ceiling on housing expenses when calculating a delinquent taxpayer's ability to pay monthly. 

In many cases, a taxpayer attempting to resolve a back tax liability will be over the housing and utilities expense which can often increase the monthly payment amount requested by the IRS.  There are a couple of ways around this depending on your situation...

Does your family have a vehicle?  Two?  Three?

If you are negotiating a back tax debt with the IRS, you may be subject to the Collection Financial Standards.  If you have three vehicles in your family, the IRS may only allow the expenses associated with two of them when determining your collection potential. 

In addition, they may not allow your whole monthly car payment or your monthly vehicle operating expenses.  The Service has ceilings on these expenses for collection purposes.

They a...

In an effort to treat all taxpayers that are attempting to resolve a back tax debt equal, the IRS has limits or caps on certain monthly expenses.  The Service calls these expense ceilings Collection Financial Standards.  The Service uses the Standards to help establish your ability to pay. 

The Collection Financial Standards can be found online at here.The Standards are updated yearly, April 1st.

The Standard amounts determined by the IRS for Food, Clothing and misc items, as well as those...