IRS Revises Collection Financial Standards - Effective April 1, 2013
Collection Financial Standards impact the IRS computation of acceptable offers in compromise and installment agreements. These are critical standards used by the IRS in determining the allowable budget of taxpayers who owe money to the IRS. The direct link for the Collection Financial Standards can be found at http://www.irs.gov/Individuals/Collection-Financial-Standards, or on our CPA firm website, www.taxattorney cpa.com. The standards are usually revised annually.
Some highlights of the changes:
- National Standards for food, clothing, and other items increased from ½ % to as high as 3% depending upon family size. For a family of four, the monthly allowance increased from $1,450 to $1,465.
- Local Standards for Housing and Utilities in New Jersey increased from 2% to 3%. For a family of four in Middlesex County, the maximum monthly allowance increased from $3,008 to $3,091.
- There was no increase in transportation standards. The maximum monthly ownership costs remain at $517 per vehicle, while the allowable operating costs continue to range from a low of $192 per month for the Seattle area to a high of $342 per month for the New York metropolitan area. This range has not changed since March 1, 2010.