2012 IRS Allowable Expenses & IRS Collection Financial Standards

Below is a link to the IRS Collection Financial Standards, aka 2012 IRS allowable expenses effective 4/2/2012.  If you have questions about this review, please reference:  bp107.

• If you know you need to take action, read my article “IF” you should hire IRS back tax help.  (You should not automatically.) Titled “Owe IRS back taxes? When, who, and how do I hire IRS back tax help?” before you do anything else.

As usual, If you like the tone of this writing, I would like to refer you to someone who meets irs back tax help criteria.  Please contact irs back tax help.  Before you email me, please click on and read “About irs back tax help.”

IRS Allowable Expenses for 2012

irs.gov link and original and full text:  2012 IRS Allowable Expenses if you owe back taxes.

These Collection Financial Standards are only for use with past due IRS taxes.  If you owe the IRS back taxes and you are entering bankruptcy, you must use the US Trustee Program.

You must be aware of these standards prior to submitting your IRS From 433a or 433b Collection Information Statement.  If you’re not, you may be surprised at the results.  Not being aware of your allowable expenses may give the IRS the upper hand in negotiating your repayment of back taxes.  The IRS will compare your submission to these collection standards when determining how you will be able to address the back taxes owed.  I would venture to say the majority of a tax resolution company’s work is renegotiating IRS pay plans that people initially negotiated on their own.  

“Collection Financial Standards are used to help determine a taxpayer’s ability to pay a delinquent tax liability.  Allowable living expenses include those expenses that meet the necessary expense test.   The necessary expense test is defined as expenses that are necessary to provide for a taxpayer’s (and his or her family’s) health and welfare and/or production of income.”

IRS National Collection Standards include food, clothing, and “out-of-pocket” healthcare.

IRS Local Collection Standards that vary by location include housing, utilities, and transportation.

What’s new for 2012 IRS Allowable Expenses?  Improvements for people and businesses who owe back taxes. 

• The 6 year collection rule.  IRS Installment Agreements can now be as long as 72 months.  Last year, the maximum length of an IRS Installment Agreement was 60 months.  This is a great addition for delinquent taxes when cash flow remains a big concern. 
• Updates for cable and internet expenses.
• Additional items were added to the miscellaneous allowance under National Standards for Food, Clothing and Other Items, increasing the amount allowed for miscellaneous expenses.

There is a hidden problem that people don’t always see coming inside IRS allowable expenses, and it revolves around mortgage payments.  I often get the question “Will the IRS take my house/home?”  Generally, no.  What people don’t realize is that the IRS only accepts the allowable expense, which is often below the real mortgage payment in our over-mortgaged, home devalued economy. 

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If you would like irs back tax help to be your first or second opinion, I can be reached at irsbacktaxhelp@gmail.com.  I do not pressure people in an already stressful situation.

Regards,

irs back tax help