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Monday, April 16, 2012

IRS Updates National Collection Financial Standards for Installment Agreements, Offers in Compromise

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 The IRS has posted to its website updates to the National Collection Financial Standards used to evaluate a taxpayer’s ability to pay and other financial circumstances primarily in connection with installment agreements and offers in compromise. The revised standards are effective April 2, 2012.

National standards for food, clothing and other items apply nationwide. Taxpayers are allowed the total national standards amount for their family size, without questioning the amount actually spent. National standards also have been established for minimum allowances for out-of-pocket health care expenses, and taxpayers are allowed the standard amount on a per person basis, without regard to the amount actually spent. Lastly, local standards apply for housing and utilities and transportation. In most cases, a taxpayer is allowed the amount actually spent, or the local standard, whichever is less.

(See http://www.irs.gov/individuals/article/0,,id=96543,00.html)

Kenneth S. Savell, J.D. LL.M (Tax)
IRS Practice and Procedure Group
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