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    • Ronson J. Shamoun, ESQ., LL.M.
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  • Home
  • About
    • Ronson J. Shamoun, ESQ., LL.M.
    • Chandara Diep, ESQ., LL.M.
    • Joseph Cole, ESQ., LL.M.
    • Devon J. Arabo, ESQ., LL.M.
    • Lauren Suarez, ESQ., LL.M.
    • Daniel Huynh, Esq., LL.M.
    • Christopher Engelmann, ESQ., LL.M.
    • Leslie Miranda, Esq., LL.M.
    • Brian M. Malloy, Esq.
    • Steve S. Mattia, Esq.
    • Sam Imandoust, ESQ., LL.M
    • Kaveh Imandoust, JD, MBT, CPA
    • Andrea Cisneros Valdez, Esq., LL.M.
    • Martin Schainbaum, ESQ., LL.M.
    • Dod Ghassemkhani, ESQ.
    • Vincent Renda, Esq.
    • Pedro Bernal, Esq.
    • Melanie M. Shamoun
    • Sandie Portilla
    • Renae Arabo
    • Sabri P. Shamoun
    • Hilary Dargavell
    • Lupita C. Torres
    • Jewell Cornejo
    • Kesia Belford
    • Remy Hogan
    • Judith Jeremie
    • Marley Smith-Peters
    • Melanie Chan
    • Tanner DeMera
    • Charles Ecker
    • Anna Gurr
    • Asia Smith
  • Practices
    • ERTC – Call Us Before It’s Too Late!
    • Tax
      • IRS TAX MATTERS
        • IRS Appeals
          • IRS Appeals Process
          • Contesting an IRS Levy
          • Why Retain RJS LAW for IRS Appeals
          • 4 Tips For Navigating The IRS Rapid Appeals Process
        • IRS AUDITS
          • IRS Correspondence Audits
          • What are IRS Field Audits?
          • Initial IRS Compliance Center Audits
          • IRS Office Audits
          • What happens in an IRS Audit?
          • Taxpayer Rights Under IRS Publication 1
          • IRS Warns Taxpayers About Scam
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          • Avisos en Español
        • IRS Collections
          • Avoiding and Eliminating IRS Tax Liens
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          • Failure to file a tax return: What happens?
          • How the IRS calculates interest
          • How to get a tax levy released
          • ACS – Automated Collection System
          • IRS Collections Process
          • IRS Interest Abatement
          • IRS Revenue Officers
          • Jeopardy Assessments and Jeopardy Levies
          • National Tax Agencies
          • RJS LAW Approach to Collections
          • IRS Statute of Limitations on Collections
          • Streamlined Installment Agreements
          • Tax Penalty Abatement
          • Taxpayer Assistance Orders
        • IRS Payroll Tax
          • Independent Contractor Reclassification Audits
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          • Payroll Tax Liability Payment Options
          • Trust Fund Recovery Penalties
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          • OVERVIEW OF OFFER IN COMPROMISE PROCESS
          • The Offer in Compromise Process
          • Appealing an Offer in Compromise
          • How does the IRS evaluate an Offer in Compromise
          • Offer in Compromise and Dissipated Assets
          • Offer in Compromise Requirements
          • Pros and Cons of an Offer in Compromise
          • Why Choose RJS LAW?
          • Offer in Compromise Alternatives
          • Actual IRS Offer in Compromise Results
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          • Discharging State Income Taxes in Bankruptcy
          • State Tax Practice – Outside of California
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        • Criminal Investigation Division
        • IRS Criminal Investigation Division Tactics
        • Criminal Tax Defense – Tax Crimes
        • Currency Transaction Records & Suspicious Activity Reports
        • IRS Methods of Proof: Tax Fraud and Evasion
        • Methods IRS Agents Use to Locate Assets
        • IRS Special Agent Visits
        • Are You a Criminal Investigation Target?
        • Criminal Tax Attorney vs. White Collar Defense
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  • Tax Institute
    • 8th Annual USD School of Law – RJS LAW Tax Controversy Institute – July 28th, 2023
    • 7th Annual USD School of Law – RJS LAW Tax Controversy Institute – July 15th 2022
    • 6th Annual USD School of Law – RJS LAW Tax Controversy Institute
    • 5th Annual USD School of Law – RJS LAW Tax Controversy Institute
    • 4th Annual USD School of Law – RJS LAW Tax Controversy Institute
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IRS Releases New Collection Financial Standards for 2023

IRS Collection Financial Standards

IRS Collection Financial Standards

The IRS recently released the new Collection Standards for 2023.  The IRS Collection Financial Standards are significant because they often determine what a Taxpayer can “reasonably afford” when a Taxpayer makes a payment arrangement  such as an Offer in Compromise, Currently Non-Collectable Status, or an Installment Agreement with the IRS for back taxes.  The Collection Standards can determine whether a taxpayer qualifies for an Offer in Compromise, Currently Non-Collectable (CNC) status, and/or determine the terms of a Taxpayer’s installment agreement. Other taxing authorities including the Franchise Tax Board (FTB) look to the IRS Collection financial standards when determining what a Taxpayer can “afford” as well.

The Collection standards showed some increases over the 2022 standards to account for inflation. (Whether the increases in the 2023 standards are sufficient enough is certainly debatable.) The standards have always been unforgiving when it comes to allowances for housing and utilities. The table below summarizes the 2023 standards’ allowances for housing and utilities for three Southern California counties.

IRS Releases New Collection Financial Standards for 2023

To give an example of how these collection standards work, let us say a couple in San Diego County with one child (a family of 3) owes back taxes to the IRS and they need to get on a monthly payment plan. The IRS will often base the payment plan on what the couple can “afford.”  It will allow the couple $3,548 for housing and utilities which would include rent or mortgage, electricity, gas, water, trash, internet, telephone, home maintenance, property taxes, HOA fees, and several other housing related expenses. If the couple’s actual housing and utilities expenses exceed $3,548, the IRS will often not consider the excess expenses in determining what the couple can afford. The couple may be expected to somehow “downgrade” or cut their housing expenses to pay the IRS.

The IRS has similar standards for food, clothing, and transportation expenses. Some standards are the same nationwide. For example, taxpayers in all parts of the country are allowed the IRS standards for food, clothing, and other expenses listed below.

IRS Releases New Collection Financial Standards for 2023

Housing and vehicle operation costs vary from locale to locale. As shown above, Taxpayers in different counties have different housing and utilities allowances. Taxpayers who reside in more expensive parts of the country like Southern California have a higher allowance than less expensive parts of the country. Taxpayers in different regions have different vehicle operating costs. Again, in certain regions of the country operating expenses like insurance and parking can be more expensive than in other regions.

The standards serve two purposes. First, they allow the IRS and taxpayers to streamline the collection process. It is usually easier for the Taxpayer and IRS to use standards for food expenses than for the IRS and taxpayers to parse through receipts and other records to substantiate expenses. Second, and most importantly, the standards are supposed to create a “reasonable” standard for determining what a taxpayer can truly “afford.”  A taxpayer should not be able to claim he or she cannot afford to pay his or her past due taxes while living high on the hog. Whether the standards effectively accomplish the goal of creating a reasonable standard or whether they are too draconian is certainly debatable.

At RJS LAW, we help families and businesses with past due tax debts to navigate their way through the IRS Collection process. We also help families and businesses with EDD, Franchise Tax Board, and CDTFA collection issues as well. Please us today for a free consultation at 619-595-1655 or contact us on the web at RJS LAW if you are having difficulty paying your past due taxes.

Written by Joseph Cole, Esq., LL.M.

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