Tax Problems Blog

December 26, 2017

Owe Back Taxes? No retirement savings for you.

Filed under: IRS Allowable Living Expense Standards — Tags: , — Administrator @ 1:21 pm

The IRS Allowable Living Expense standards do not provide for a minimal retirement savings allowance in computing a taxpayer’s ability to pay. However, retirement savings are in actuality necessary for maintaining the health and welfare of today’s families. The IRS position is that “discretionary retirement savings” are not a necessary current living expenses while the taxpayer is repaying past due taxes. Instead, the IRS views such a provision as an amount which can be paid to them. Of course, for example, if you work for a State or a City which “requires” retirement savings, then such is “allowable”. This IRS “double speak” is absurd.

The Taxpayer Advocate in its Fiscal Year 2018 Objectives Report to Congress has clearly stated that the current Allowable Living standards are not based upon “an amount of money that allows for a basic standard of living”. Contrary to the IRS position, providing for retirement is necessary for a family’s health and welfare. The Taxpayer Advocate has advised in its Objectives Report that it will be issuing a Taxpayer Advocacy Directive ordering the IRS to expand the categories available in the Allowable Living Expenses. Hopefully, this will include minimal retirement savings.

December 21, 2017

Your basic standard of living and determining “ability to pay”. Is the IRS not following the law?

Filed under: IRS Abuse, Misuse, and Taxpayer Rights Violations — Administrator @ 5:04 pm

When a taxpayer owes back taxes, a financial analysis is done. Question: what expenses are you “allowed” to claim? Despite the IRS publications about “taxpayer rights”, the reality is that in many cases, such is merely “for publication”. The IRS is not actually respecting your “rights”.

The Internal Revenue Code mandates that the IRS national and local allowances for taxpayer’s living expenses are to provide for an adequate means to provide for basic living expenses. These “allowances” play a major role in collection cases (for example, Offers in Compromise, installment agreements, undue hardship, etc… ).

The problem is that the IRS computational basis for its allowances is what people spend to live, not what goods or services actually cost to live. Moreover, the IRS excludes some essential expenses from its category of “necessary” (thus the IRS prevents you from claiming them).

As stated by the Taxpayer Advocate – “By focusing on what expenses are allowable instead of adequate, the IRS has exercised its discretion in a way that does not meet congressional intent, since “allowable” is not synonymous with “adequate” or “basic”. Instead, the IRS should adopt standards that allow for a sufficient or adequate standard of living”. [See Taxpayer Advocate Service – Fiscal Year 2018 Objectives Report to Congress – Volume One – Area of Focus #8].

The Taxpayer Advocate concluded in its report that the current IRS allowable expense standard “is not based on an amount of money that allows for a basic standard of living. It also does not take into account all expenses that are necessary for a basic standard of living today”. [See Taxpayer Advocate Service – Fiscal Year 2018 Objectives Report to Congress – Volume One – Area of Focus #8].

When you need assistance with an IRS problem, please call me. The consultation is free. My toll free number is 1-866-482-9707. Visit me on the web at:

December 19, 2017

IRS – Private Debt Collectors

Filed under: IRS Levy and Tax News — Administrator @ 12:31 pm

The Internal Revenue Service is again using Private Debt Collectors to collect outstanding inactive tax receivables. The Internal Revenue Service Advisory Council (2017 Report) has raised a number of issues regarding the use of Private Debt Collectors, discussed below.

1. Taxpayers and their representatives have dealt solely with the IRS concerning the collection of outstanding tax debts. The use of Private Debt Collectors introduces another layer of complexity with the potential for diminishing transparency.

2. Increased opportunities for Identity Theft, Fraud and Scamming of taxpayers.

3. The Private Debt Collectors will have access to confidential taxpayer information, increasing the potential abuse of taxpayer confidential information. Further, since taxpayer data will now reside on additional databases, there is an increase in the taxpayer’s exposure to potential identity theft by hackers.

4. Concerns about fraudsters claiming to be the IRS demanding immediate payments to fraudulent accounts.

5. The Private Debt Collectors may be motivated to use aggressive tactics since their compensation is based on a percentage of their collections.

If you owe the IRS, contact me. The consultation if free.

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