TaxSOS.com Tax Problems Blog

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: www.TaxSOS.com

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