Stand Up to the IRS Blog

If you’ve listened to a few sales pitches, you may have heard the term “National Standards”.  But what are they?

Typically, when a sales person talks about “National Standards”, they’re referring to the IRS Collection Financial Standards, which include both the National Standards and Local Standards.

• National Standards:  
  • Food, Clothing and Other Items
  • Out-of-Pocket Health Care Expenses
• Local Standards:
  • Housing and Utilities
  • Transportation

When it comes to calculating your ability to pay for an IRS

• Offer in Compromise, 
• Installment Agreement, or
• Currently Not Collectible request,

the Collection Financial Standards are very important.  The IRS uses them as a guide to determine whether your expenses are reasonable (in the eyes of the government) when considering an alternative resolution to a tax debt.

What Are They?

IRS Collection Financial Standards are used to calculate a taxpayer’s ability to repay delinquent taxes.  They are limits placed on monthly expenses.  The IRS uses them as a guide to determine the appropriate allowable expense when calculating ability to pay monthly.

Where Do I Find Them?

You can find the IRS Collection Financial Standards here on the irs.gov website.

How Do I Use Them?

1. Consider the Standards when completing the income/expense section of your 433 form.  Use them as a guide, just as the IRS would.
2. Use them to your advantage when possible.  Some of the Standard expense amounts will be accepted without question.  
3. If you need to go over a Standard expense limit, be prepared to provide the reason and substantiation with your submission of the form.

Are They Set In Stone?

NO!  Some of your monthly expenses may be allowed to exceed the Standards, but you will be expected to provide substantiation.  The IRS may agree to a higher expense if it meets the necessary expense test, if it is necessary for the health and welfare of the family.

• How do the Standards affect my business payroll tax debt?
• Is my child's tuition allowable?
• Does the IRS expect me to NOT pay my mortgage?!!!!

We have the answer to your questions.  We work with the IRS Collection Financial Standards for our clients every day, and we can do the same for you.

Call or send us a message with your question.