Contents
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[5.15] 1.1 (11-15-2000)
Overview
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- An interest based
interview (IRM 5.14.1.4) should be conducted in order to determine the
appropriate form of case resolution.
- If the taxpayer
states he or she cannot fully pay the liability, the following case
decisions should be considered:
- Allow an extension
of time to full pay (IRM 5.14.2.4)
- Grant a guaranteed
or streamlined installment agreement (IRM 5.14.2.2 and IRM 5.14.2.3) if
the taxpayer qualifies for these options
- Explore
possibilities of deferring other debts, or borrowing on or selling
assets to pay in a short time
- If the taxpayer is
unable to meet any of the conditions in (2) above, financial analysis is
necessary. Financial information may be secured on:
- The ACS financial
information screen (FIN)
- Form 433-A,
Collection Information Statement for Individuals
- Form 433-B,
Collection Information Statement for Businesses
- Form 433-F,
Collection Information Statement (CIS) (can substitute for Form 433-A
for individuals owing less than $100,000)
- The taxpayer's own
financial statement
- Analysis of a taxpayer's
financial condition provides you with a basis to make one or more of the
following case decisions:
A. Make
an installment agreement
B. File
a Notice of Federal Tax Lien.
C. Explain
an offer in compromise.
D. Report
the account currently not collectible.
E. Recommend
or initiate enforcement action if assets are available to pay taxes and a
taxpayer is unwilling to convert the assets to cash, and no reasonable
alternative for collection exists (see IRM 5.10.1.3.2 for information on
conducting a risk analysis
- Installment payments
may be used for collection of the tax. Such payments are based on the
taxpayer's ability to pay, which is determined by the excess of monthly
income over allowable expenses. This chapter will assist you in
determining the amount of allowable expenses.
- See the following
exhibits:
- Exhibit 1-2,
Financial Analysis -- Expenses. An alphabetic listing and discussion of
major expenses
- Exhibit 1-3,
Questions and Answers to Assist in Financial Analysis
- Exhibit 1-4,
Collection Financial Analysis: Total Monthly National Standards
- Exhibit 1-5,
Collection Financial Analysis: Monthly National Standards -- Itemized
- Exhibit 1-6,
Collection Financial Analysis: Total Monthly National Standards for
Alaska
- Exhibit 1-7,
Collection Financial Analysis: Monthly National Standards for Alaska --
Itemized
- Exhibit 1-8,
Collection Financial Analysis: Total Monthly National Standards for
Hawaii
- Exhibit 1-9,
Collection Financial Analysis: Monthly National Standards for Hawaii --
Itemized
- Exhibit 1-10,
Collection Financial Analysis: Local Standards: Housing and Utilities
- Exhibit 1-11,
Collection Financial Analysis: Local Standards: Transportation
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[5.15] 1.2 (11-15-2000)
Analyzing and Verifying Financial Information
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- Analyze the income
and expenses to determine the amount of disposable income (gross income
less allowable expenses) available to apply to the tax liability.
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[5.15] 1.2.1 (11-15-2000)
Sources of Information
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- The following
sources may be used to secure finacial information:
- Information
received from the taxpayer.
- Corporate Files
On-Line (CFOL) command codes (IRPTR or RTVUE).
- When analyzing a
taxpayer's financial situation, compare information on the FIN screen or
CIS with CFOL commands or other sources.
A. If
there are significant discrepancies, discuss them with the taxpayer. If
substantiation is needed, ask the taxpayer to provide it.
B. Note
discrepancies and their resolution in Comments or history and make necessary
corrections to the FIN screen or CIS.
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[5.15] 1.2.2 (11-15-2000)
Determining Maximum Collectibility
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- Analyze income and
assets to determine ways of resolving the account. Follow the steps in
5.15.1.1 in order to determine the most appropriate course of action.
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[5.15] 1.2.3 (11-15-2000)
Analysis, Substantiation, and Verification of Income and Expenses
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- Expenses must be
reasonable for the size of the family, the geographic location, and any
unique individual circumstances. You may allow more than a reasonable
amount for an expense if the tax liability including projected accruals
can be fully paid within five years. See Section 5.15.1.3.3.1.
- A taxpayer is not
required to substantiate expenses which are categorized as National
Standards unless they exceed the standards.
- A taxpayer may be
required to substantiate expenses which are categorized as Local
Standards or Other Necessary Expenses.
- Substantiation of
expense amounts could include items like bank statements, credit card
vouchers, rent/lease receipts and leases, payment coupons, court orders,
contracts, and canceled checks. Taxpayers who own homes should provide
documents showing the monthly payment amount, purchase price, date of
purchase, and the principal amount due. When obtaining documents for
substantiation, ask the taxpayer for copies, not original documents. If
necessary, secure telephone numbers and contact names of creditors.
These can be used if verification is necessary.
- When analyzing
expenses for a business taxpayer, make sure that business expenses are
not also included under personal expenses. Also, depreciation is not a
cash expense for determining disposable income.
- Compare income to
expenses. If expenses exceed income, ask the taxpayer for an
explanation. Look at the last filed return using CFOL cc RTVUE to see if
an understatement of income is also present there. If so, consider
referral to Examination.
- For installment
agreement or currently not collectible dispositions, consider future
expenses; for example, the birth of a child or need to replace a car.
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[5.15] 1.3 (11-15-2000)
Definitions
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- Allowable
expenses . There are two types: necessary and conditional.
- Necessary
expenses . These must meet the necessary expense test: they must
provide for a taxpayer's and his or her family's health and welfare
and/or the production of income. The expenses must be reasonable. The
total necessary expenses establish the minimum a taxpayer and family
need to live. Three types of necessary expenses are:
- National
Standards. These establish standards for reasonable amounts for
five necessary expenses. Four of them come from the Bureau of Labor
Statistics (BLS) Consumer Expenditure Survey: food, housekeeping
supplies, apparel and services, and personal care products and
services. The Service has established standards for the fifth category,
Miscellaneous.
- Local
Standards. These establish standards for two necessary expenses:
housing and transportation. Utilities are included in housing.
- Other.
Other expenses may be allowed if they meet the necessary expense test
and they must be reasonable in amount. Since there are no nationally or
locally established standards for determining reasonable amounts, you
must determine whether the expense is necessary and the amount is
reasonable.
- Conditional
Expenses. These expenses do not meet the necessary expense test.
However, they are allowable if the tax liability, including projected
accruals, can be fully paid within five years.
- Five-year rule.
Excessive necessary and conditional expenses may be allowed if the tax
liability including projected accruals will be fully paid within five
years. Use IDRS cc ICOMP to calculate accruals.
- One-year rule.
A taxpayer may have up to one year to modify or eliminate excessive
necessary or not-allowable conditional expenses if the tax liability
including projected accruals cannot be fully paid within five years.
- Reasonable
amount. For specified expenses, the reasonable amounts are provided
by the National and Local Standards. For other expenses you must
determine if the amount claimed is reasonable. If the tax liability
including accruals can be fully paid within five years, allow the
taxpayer's claimed expenses.
- Disposable
income. This is the amount of income that remains after allowable
expenses are deducted from gross income, including deductions required
by law to be withheld, or any child support or alimony payments that are
made under a court order or legally enforceable written agreement.
Amounts required by law to be withheld include, but are not limited to,
Federal and State taxes, FICA contributions, Medicare contributions, and
wage garnishment payments. Disposable income is the amount available to
apply to the tax liability.
- Substantiation
and verification. A taxpayer substantiates by providing proof of
expenses. The Service verifies by checking on information provided by
the taxpayer and by obtaining information from internal and external
sources.
- Substantiation.
A taxpayer is required to provide evidence and justification for
claimed expenses, except National Standards. See LEM 5.3.1.
- Verification.
In some cases, it may be necessary to obtain additional information
about a taxpayer's financial condition using third party data.
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[5.15] 1.3.1 (11-15-2000)
Allowable Expenses
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- Allowable expenses
include:
- Necessary
expenses -- if reasonable are always allowed. A case would be
closed as currently not collectible if there is no disposable income
beyond necessary expenses.
- Conditional
expenses -- are allowable if a tax liability can be fully paid
within five years through an installment agreement.
- A list of typical
necessary and conditional expenses appears in Exhibit 5.15.1-2. This
exhibit includes discussions of expense types and conditions which
determine whether an expense is allowable.
- In discussing
expenses with taxpayers, emphasize how much we expect from them rather
than how we expect them to spend their money. For example, if the
taxpayer has excessive necessary or not-allowable conditional expenses:
- Do not tell the
taxpayer that he or she cannot own, for example, a boat or summer
cabin.
- Tell the taxpayer
that we expect an amount equal to that going to excessive necessary or
not-allowable conditional expenses.
- Tell the taxpayer
that he or she is responsible for determining what modifications or
eliminations must be made to expenses to pay the tax.
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[5.15] 1.3.2 (11-15-2000)
Necessary Expenses
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- Necessary expenses
are those used for taxpayers and their families for:
- Their health and
welfare.
- The production of
income.
- Unless the Service
receives full payment within five years (see Section 5.15.1.3.3.1),
necessary expenses must be reasonable. The total necessary expenses
establish the minimum a taxpayer and family need to live.
- Accounts closed as
currently not collectible, offer in compromise, and as installment
agreements requiring more than five years will be allowed only necessary
expenses. For installment agreements which require more than five years,
you may grant up to a year to eliminate excessive necessary and not
allowable conditional expenses.
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[5.15] 1.3.2.1 (11-15-2000)
Necessary Expenses: National Standards
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- A number of necessary
expenses are categorized as National Standards. They are: housekeeping
supplies, apparel and services, personal care products and services,
food, and miscellaneous.
- Except for
"miscellaneous," the National Standards are derived from
Tables 1, 3, 4, and 5 of the Bureau of Labor Statistics (BLS) Consumer
Expenditure Survey. These expenses are stratified by income level; as
income levels increase, the percentage of income provided for these
expenses decreases. They will be updated yearly as the information
becomes available through BLS. The miscellaneous expense is a
discretionary amount established by the Service. It is $100 for one
person and $25 for each additional person in a taxpayer's household.
- The total monthly
National Standards appear in Exhibit 5.15.1-4. This exhibit provides
the total amount allowed a taxpayer, by gross income level and by
number of persons in the household.
- The monthly
National Standards, by type of expense and by totals, appear in Exhibit
5.15.1-5.
- The total monthly
National Standards for Alaska appear in Exhibit 5.15.1-6.
- The monthly
National Standards for Alaska appear in Exhibit 5.15.1-7.
- The total monthly
National Standards for Hawaii appear in Exhibit 5.15.1-8.
- The monthly
National Standards for Hawaii appear in Exhibit 5.15.1-9.
- National Standards
eliminate the need to require justification or substantiation for a
number of recurring expenses.
- Allow taxpayers
the total National Standards amount for their income level. Taxpayers
making more than the highest income level shown in the National
Standards will be limited to the maximum amount allowed by the National
Standards unless they can substantiate and justify a larger amount.
- How the amount
allowed for National Standards is spent is up to taxpayers. For example,
they may spend less for clothing and more for entertainment (including
cable T\/V); or they may decide to apply part of the amount to
conditional unsecured debts.
- A taxpayer who
claims more than the total allowed by the National Standards must
substantiate and justify as necessary each separate expense of the
total.
EXAMPLE:
A taxpayer may claim much more
for food than allowed if based on special prescribed or required dietary
needs.
- If a taxpayer can
fully pay the tax liability including projected accruals within five
years, he or she may be allowed more than the National Standards amount.
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[5.15] 1.3.2.2 (11-15-2000)
Necessary Expenses: Local Standards
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- For some kinds of
expenses, the National Standards are not feasible: for example, housing,
utilities, and transportation (including car insurance and public
transportation).
- Local standards for
housing and transportation have been developed. Utilities, including
telephone, are covered under housing. Taxpayers will be allowed the
local standard or the amount actually paid, whichever is less. See
Exhibits 5.15.1-10 and 5.15.1-11.
- Housing. The
housing standard provides the basis for determining whether a taxpayer
will be required to pay the Service an amount equal to excessive or
not-allowable housing expenses. Standards are established for each
county within the district. When deciding whether a taxpayer should be
required to pay the Service an amount equal to excessive or
not-allowable housing expense, consider the cost of moving to a new
residence, the increased cost of transportation to work and school
which would result from moving to lower-cost housing, and the tax
consequences of the loss of the interest deduction.
- Transportation.
The transportation standard provides the basis for determining if the
taxpayer will be required to pay the Service an amount equal to
excessive or not-allowable transportation expenses. (1) As part of the
standard, amounts are allowed for car purchase and lease, establishing
different rates for a first car and, if allowed, a second or more cars.
(2) Consider availability of public transportation if car payments
(purchase or lease) will prevent the tax liability being paid in part
or in full. Public transportation could be an option if it doesn't
significantly increase commuting time and inconvenience the taxpayer.
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[5.15] 1.3.2.3 (11-15-2000)
Necessary Expenses: Other
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- Depending upon
individual circumstances, other expenses may meet the necessary expense
test: they must provide for the health and welfare of the taxpayer
and/or his or her family, or they must be for the production of income.
- A taxpayer must
substantiate the amounts and justify the expenses as necessary, unless
the tax liability will be fully paid, including projected accruals,
within five years. Other expenses which may meet the necessary expense
test include, but are not limited to:
- Child care.
- Dependent care:
elderly, invalid, or disabled.
- Taxes.
- Health care.
- Court-ordered
payments.
- Involuntary
deductions.
- Secured or legally
perfected debts (minimum payments).
- Life insurance.
- Disability
insurance for self-employed individual.
- Union dues.
- Professional
association dues.
- Accounting and
legal fees for representing a taxpayer before the Service, and other
fees which meet the necessary expense test.
- Optional telephone
service (call waiting, call identification, etc.), or long distance
calls, if they meet the necessary expense test.
- Charitable
contributions. To be necessary, charitable contributions have to provide
for a taxpayer's or his or her family's health and welfare or be a
condition of employment. Otherwise, they are conditional and allowable
only if the tax liability, including projected accruals, can be paid
within five years.
- Education. To be a
necessary expense, a taxpayer must demonstrate that the expense is for a
physically or mentally handicapped dependent and the education is not
provided by public schools; or the expense must be a condition of
employment.
- The expenses listed
in 5.15.1.3.2. do not exhaust the category of necessary expenses. Other
expenses may be considered if they meet the necessary expense test;
health and welfare and/or the production of income.
- If other expenses
are determined to be necessary and, therefore, allowable, document the
reasons for the decision in the ACS Comments or case history.
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[5.15] 1.3.2.4 (11-15-2000)
Necessary Expenses: Other -- Unsecured Debts
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- Payments on
unsecured debts may also be necessary. Allow minimum payments if a
taxpayer substantiates and justifies the expense as necessary for either
the health and welfare of the taxpayer and/or his or her family or for
the production of income. Unsecured debts are rarely necessary expenses.
Examples of unsecured debts which may be necessary expenses include:
- Payments required
for the production of income; for example, payments to suppliers and
payments on lines of credit needed for business;
- Payment of debts
incurred, except to friends and relatives, to pay a federal tax
liability.
- Except for payments
required for production of income, don't allow payments on unsecured
debts if the tax can be paid in full within 90 days.
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[5.15] 1.3.3 (11-15-2000)
Conditional Expenses
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- Conditional expenses
are those that may be allowed if certain requirements are met.
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[5.15] 1.3.3.1 (11-15-2000)
Conditional Expenses: Five-Year Rule for Full Payment
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- If taxpayers
establish they can stay current in all tax requirements and that the tax
liability including projected accruals can be paid within five years,
all expenses may be allowed, if amounts are reasonable.
- Although five years
are allowed, base agreements on the taxpayer's actual ability to pay.
Don't automatically allow agreements for the five-year maximum if the
excess of income less expenses would allow them to pay in a shorter
period of time. See IRM 5.14. for Installment Agreement procedures.
- Taxpayers may have
incurred excessive necessary and not-allowable conditional expenses
after the assessment of the tax liability. These expenses are not
covered by the five-year rule. If you feel the taxpayer has incurred
them to reduce the ability to pay, enforcement against the
post-assessment assets or not allowing the expenses in an installment
agreement may be appropriate.
- In unusual
circumstances, it may be appropriate to allow conditional expenses even
if the liability, including projected accruals, cannot be paid within
five years. The basis for the exception must be fully explained in the
case history, and expenses must be substantiated.
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[5.15] 1.3.3.2 (11-15-2000)
Conditional Expenses: Unsecured Debts
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- Don't allow payments
on unsecured debt, including credit or charge cards, if omitting them
would permit a taxpayer to pay in full within 90 days.
- Allow payments if the
tax including projected accruals will be paid within five years. Note
dates for final payments of the unsecured debts so additional funds can
be applied to the tax. Include the increase in payments in installment
agreements.
- If the tax can not be
paid within five years, tell the taxpayer that unsecured debts which are
conditional expenses are not allowed, and he/she must pay an amount
equal to the expense.
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[5.15] 1.3.3.3 (11-15-2000)
One-Year Rule for Eliminating Excessive Necessary and Not-Allowable
Conditional Expenses
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- Taxpayers who cannot
full pay their accounts within five years may be given up to one year to
modify or eliminate excessive necessary and/or not-allowable conditional
expenses. By modifying or eliminating some conditional expenses, the
taxpayer may be able to full pay the liability within the five-year
limit. This would enable the taxpayer to retain some conditional
expenses.
- For the first year or
part of the year, make an installment agreement for an amount, even if
minimal, which can be paid until the date the excessive or not allowable
expenses are to be modified or eliminated. See 5.14 for installment
agreement instructions.
- An installment
agreement must include a payment increase at the date the taxpayer is
expected to have modified or eliminated excessive necessary or
not-allowable conditional expenses. Taxpayers are responsible for
determining how best to adjust or eliminate expenses.
- If a taxpayer
proposes an installment agreement that does not meet these terms, the
case must be referred to the Independent Reviewer. See IRM 5.14 for
these procedures.
- Excessive necessary
expenses include, but are not limited to:
- Transportation. Car
payments (purchase or lease) for luxury cars or for cars which do not
meet the necessary expense test .
- Education. The
taxpayer may be paying for a child's private school or university education.
Tell the taxpayer that, unless it is determined to be a necessary
expense, it will not be allowed beginning with the following school
year, and we will expect an amount equal to the tuition. Taxpayers are
responsible for deciding how to adjust or eliminate expenses.
- Housing. Taxpayers
may be paying more than is warranted by their income level or may be
paying more than is necessary for similar housing. Before determining
if housing expenses are excessive, consider what is involved: leases,
saving money for moving, loss of the interest deduction, and selling a
house.
- If at the end of the
first year, or other determined period of time up to one year, the
taxpayer has not modified or eliminated excessive necessary and/or not
allowable conditional expenses, grant additional time to do so only in
unusual circumstances. Document the basis for the exception.
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[5.15] 1.4 (11-15-2000)
Making The Collection Decision
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- After the income and
expense analysis has been completed, a collection decision can be made
on the account.
- Some of the
alternative collection decisions include:
- Installment
Agreement
- Enforced
Collection
- Offer-in-Compromise
- Currently Not
Collectible
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[5.15] 1.4.1 (11-15-2000)
Installment Agreement
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- In some cases,
payments on expense items are not due in regular monthly increments; for
example, car insurance may be paid twice a year. Average expense items
with varying monthly payments over twelve months unless the variation is
excessive.
- In such instances,
tell taxpayers they are responsible for putting enough money aside to
ensure that tax payments are made during months that large payments on
other liabilities must be made.
- If the installment
agreement is for a year or less, it can be set up to reflect changes in
payment. Document the expected increase or decrease in expenses, and
adjust the installment payment amount accordingly.
- In arriving at
disposable income, analyze the taxpayer's payroll deductions to ensure
they are reasonable and allowable. The only automatically allowable deductions
from gross pay or income are federal, state, and local taxes (including
FICA and Medicare).
- Use locator number
XX12 to establish installment agreements on cases involving
non-allowable expenses which will be eliminated by the taxpayer,
permitting an increase in payment. See IRM 5.14.
- If an installment
agreement is granted to a taxpayer who has defaulted on a past
agreement, document in Comments or the case file the reason for granting
another agreement.
- If a taxpayer wishes
to make payments but financial analysis shows that he or she lacks the
resources to do so, the procedures in IRM 5.14.1.8(5) should be
followed.
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[5.15] 1.4.2 (11-15-2000)
Enforced Collection
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- After taxpayers have
been given the opportunity to resolve their accounts and failed to do
so, consider enforcing collection.
- See Chapter 6 of IRM
5.14 for the procedures to follow for Independent Review prior to
enforcing Collection if you are proposing the rejection of an
installment agreement.
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[5.15] 1.4.3 (11-15-2000)
Offer-in-Compromise
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- Consider advising
the taxpayer to submit an offer in compromise if payment by installments
will not satisfy the tax liability within the life of the CSED plus an
allowable extension. See IRM 5.8.
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[5.15] 1.4.4 (11-15-2000)
Currently Not Collectible
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- When financial
analysis indicates no means of payment, see IRM 5.16, Currently Not
Collectible (CNC) Handbook.
- Don't report cases
CNC when the taxpayer is allowed time to modify expenses.
- Don't allow
conditional expenses if a case is closed as CNC.
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Exhibit [5.15]
1-1 (11-15-2000)
Using the Tiered Interview With Allowable Expenses
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If the
taxpayer
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And:
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Then:
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Can full pay within 120 days
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Refer to 5.14
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Can NOT full pay within 120 days
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Qualifies for Streamlined IA
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Refer to 5.14
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Does NOT qualify for Streamlined IA
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Complete CIS/FIN and refer to allowable expense
procedures in this chapter.
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Per CIS/FIN:
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Can full pay (including accruals) within 5 years
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5 year rule applies--all expenses (necessary expenses
and conditional) may be allowed (see Section 5.15.1.3.3.2.)
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Can NOT full pay (including accruals) within 5 years
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Taxpayer is NOT currently-not-collectible
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Refer to Section 5.15.1.4.4.
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Taxpayer is NOT currently-not-collectible
AND
does have excess necessary expenses or not allowed expenses
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1 year rule applies--(refer to Section 5.15.1.3.3.3)
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Taxpayer is NOT currently-not-collectible
AND
does NOT have excess necessary expenses or not allowed expenses
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Follow normal IA procedures
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Exhibit [5.15]
1-2 (11-15-2000)
Financial Analysis -- Expenses (Reference: Section 5.15.1.3)
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National
Standards
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Apparel and services . Includes shoes and
clothing, laundry and dry cleaning, and shoe repair.
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Food . Includes all meals, home or away.
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Housekeeping supplies . Includes postage and
stationary; laundry and cleaning supplies; other household products:
cleansing and toilet tissue, paper towels and napkins, lawn and garden
supplies, and miscellaneous household supplies.
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Miscellaneous . A discretionary allowance. It is
$100 for one person and $25 for each additional person in a taxpayer's
family.
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Personal care products and services . Includes
hair care products, haircuts and beautician services, oral hygiene products
and articles, shaving needs, cosmetics, perfume, bath preparations,
deodorants, feminine hygiene products, electric personal care appliances,
personal care services, and repair of personal care appliances.
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Local Standards
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Utilities . Includes gas, electricity, water,
fuel oil, coal, bottled gas, trash and garbage collection, wood and other
fuels, septic cleaning, and telephone.
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Housing . Usually, only expenses for the place of
residence are considered to be necessary. Housing expenses include:
mortgage or rent, property taxes, interest, parking, necessary maintenance and
repair, homeowner's or renter's insurance, homeowner dues and condominium
fees.
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Transportation . Vehicle insurance, vehicle
payment (lease or purchase), maintenance, fuel, state and local
registration, required vehicle inspection, parking fees, tolls, driver's
license, public transportation. Transportation costs not required to
produce income or ensure health and welfare are not necessary.
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Other Necessary Expenses
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Accounting and legal fees . Fees are necessary
only if they are for representation before the Service or they meet the
necessary expense test of health or welfare and/or production of income.
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Charitable contributions . These expenses include
donations to tax exempt organizations such as: civic organizations,
religious organizations (tithing and educational), and medical services or
associations. To be necessary, charitable contributions have to provide for
the health and welfare of the taxpayer or taxpayer's family; or be a
condition of employment.
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Child care . Baby sitting, day care, nursery, and
preschool. Expenses are necessary if they meet the necessary expense test:
health and welfare and/or production of income. Ensure that only a
reasonable amount is allowed. Costs of child care can vary greatly. Don't
allow unusually large child care expenses if more reasonable alternatives
are available.
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Court ordered payments . Alimony, child support
(including orders made by a state administrative agency), and other
court-ordered payments. If the expense is already being deducted directly
from a taxpayer's pay, do not include it again as an expense.
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Dependent care . For the elderly, invalid, or
handicapped. This expense is necessary if there is no alternative to the
taxpayer paying the expense.
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Education . Education is a necessary expense if
required for a physically or mentally challenged child and no public
education providing similar services is available. It is also a necessary
expense if required as a condition of employment; for example, a teacher
whose employment is conditional upon completion of a graduate program.
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Health Care . Health insurance, medical services,
prescription drugs, and medical supplies (including eyeglasses and contact
lenses). A guide dog for someone who is visually handicapped is also
allowable.
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Involuntary deductions . Deductions from income
include FICA, Medicare, and union dues.
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Life Insurance . To be necessary, insurance is
limited to term policies. Life insurance used as an investment is not a
necessary expense. Consider if the payoff of the policy is high compared to
the lifestyle of the beneficiaries. Even for term policies, expensive
premiums must be justified.
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Secured or legally-perfected debts . If the debts
meet the necessary expense test of health and welfare and/or production of
income, payments will be allowed for these debts. To be allowed, a taxpayer
must substantiate that the payments are being made.
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Taxes . Current federal (including FICA,
Medicare), state, and local tax payments. Delinquent state and local tax
payments are necessary and, therefore, allowable depending on the priority
of the Federal tax lien and/or Service agreements with state and local
taxing agencies.
|
|
Unsecured Debts . Minimum payments should be
allowed if a taxpayer substantiates and justifies the expense. The
necessary expense test of health and welfare and/or production of income
must be met. Except for payments required for the production of income,
payments on unsecured debts will not be allowed if the tax liability,
including projected accruals, can be paid in full within 90 days.
|
|
Conditional Expenses
|
|
Accounting and legal fees . Fees are necessary
only if they are for representation before the Service or they meet the
necessary expense test of health and welfare and/or production of income.
Other accounting and legal fees are conditional expenses and are allowable
if the tax liability can be paid in full, including projected accruals,
within five years.
|
|
Charitable Contribution . These expenses include
donations to tax exempt organizations such as: civic organizations, religious
organizations (tithing and educational), and medical services or
associations. Charitable expenses which are not considered necessary are
conditional expenses and are allowable if the tax liability, including
projected accruals, can be paid within five years.
|
|
Education . Expenses for private elementary and
secondary and public and private college education are conditional expenses
and are allowable if the tax liability, including projected accruals, can
be full paid within five years.
|
|
Housing . Housing other than the principal
residence is not a necessary expense. Other housing is a conditional
expense allowable only if the tax liability, including projected accruals,
can be fully paid within five years. Examples of such housing would include
vacation property, owned, rented, leased, or time-shared. Other costs
associated with housing are usually conditional. For example, pool service
and gardening are optional and could be done by a taxpayer as opposed to
the kinds of home maintenance, like roof repair or plumbing, which would
qualify as necessary.
|
|
Life Insurance . Life insurance used as an
investment is a conditional expense. Ask the taxpayer whether it's possible
to suspend payments on whole or investment life insurance policies in order
to apply the money to the tax liability. If the policy has a cash value,
ask the taxpayer to obtain it. If the taxpayer will not voluntarily obtain
it, consider enforcement. Consider if the payoff of the policy is high
compared to the lifestyle of the beneficiaries. Expensive premiums should
be justified. Allow whole life/investment insurance as a conditional
expense if the tax liability, including projected accruals, will be paid in
full, including accruals, within five years.
|
|
Retirement--voluntary payments . Payments will be
allowed if the liability, including projected accruals, will be paid in
full within five years.
|
|
Secured or Legally Perfected Debts . Payments not
considered necessary may be allowed if the tax liability including
projected accruals will be paid within five years.
|
|
Transportation . Transportation not needed for
family health and welfare and/or the production of income is not a
necessary expense. Other than necessary vehicles are conditional expenses
allowable if the liability, including projected accruals, will be paid in
full within five years. Examples of conditional transportation expenses are
multiple vehicles and recreation vehicles.
|
|
Unsecured Debts . Allow payments on unsecured
debts if the tax liability including projected accruals will be paid within
five years. Otherwise, payments will have to come from the total amount
allowed under the National Standards. Don't allow payments on unsecured
debts, including credit cards, if omitting them would permit the taxpayer
to pay in full within 90 days.
|
|
|
|
|
Exhibit [5.15]
1-3 (11-15-2000)
Questions and Answers to Assist in Financial Analysis (Reference: Section
5.15.1.3)
|
|
1.
|
Question. If, as a condition of employment, a
minister is to tithe, a business executive is required to contribute to a
charity, or an employee is required to contribute to a pension plan, will
these expenses be allowed?
|
|
|
Answer. Yes. The only thing to consider is
whether the amount being contributed equals the amount actually required
and does not include a voluntary portion.
|
|
2.
|
Question. A taxpayer has a child in an expensive
university. She has already paid the university $25,000 for tuition and
housing for the school year, and she intends to pay another $25,000 next
July for the following school year. Should this expense be allowed?
|
|
|
Answer. Yes, if we can get a full pay within five
years. Otherwise, the expense will not be allowable. If the provisions of
LEM 5.3 are met, the taxpayer may be eligible for an allowable expense to
cover the child's enrollment at a local college. The reduced education
expense could make it possible for the taxpayer to take advantage of the
five-year rule. Tell the taxpayer that we expect an amount equal to the
tuition. She is responsible for deciding what expense modifications or
eliminations are needed to pay the tax liability.
|
|
3.
|
Question. A taxpayer is starting the second year
of a two-year lease for a luxury car. Car payments are $1,200 a month.
Should the taxpayer be allowed this expense?
|
|
|
Answer. Yes, if we can get a full pay within five
years. Otherwise, the taxpayer must justify the expense. There are some
occupations which require luxury cars. The type of car can also depend on
the location. A real estate agent will probably drive a more expensive car
if she is working in a suburb with very expensive homes than in a middle
class suburb. If the taxpayer could be expected to drive a more reasonably
priced car, then steps should be taken to eliminate the expense. Ask the
taxpayer what the penalty would be to return the car to the dealer. With
only one year left on the contract, the penalty might not be negligible
compared to the amount we could receive if the taxpayer leased a
moderately-priced car.
|
|
4.
|
Question. A taxpayer is living in an apartment
which rents for $2,000 per month. The lease has another six months to run.
The lease agreement includes a termination penalty equal to the lesser of
two months rent or the monthly rent due for the balance of the lease. The
taxpayer has a $500 security deposit. Local rental data indicates that an
acceptable rental apartment in the same general neighborhood can be rented
to house the family at a cost of $1,500 per month. The taxpayer cannot full
pay within five years. Should the taxpayer be required to move to cheaper
living quarters as a condition of an installment agreement?
|
|
|
Answer. Since breaking the lease would cost more
than keeping it until expiration, an installment agreement may be written
which allows the taxpayer to live in his present quarters for the balance
of the lease but which requires an increase of $500 with the seventh month.
|
|
5.
|
Question. A taxpayer is a commissioned sales
person living in a home with a $3,000 monthly mortgage. The property was
purchased in 1989 at the peak of the local real estate market and has lost
approximately 25% of its value in that time due to local market declines.
The present value is approximately equal to the mortgage balance. A single
family home of a size adequate to house the family is available in a middle
class neighborhood convenient to work and schools for $1,800 per month,
including utilities. If the taxpayer remains in his home, income and
expenses are approximately equal, leaving no disposable income to apply to
the delinquent federal taxes. Should the account be reported currently not
collectible?
|
|
|
Answer. No. The difference between the cost of
renting and owning indicates that a significant payment can be made if the
residence were sold. The loss of the taxpayer's equity is not the primary
consideration. Advise the taxpayer he will have up to one year to adjust
his expenses so that the Service will then receive an amount equal to the
excessive housing expense. Make an installment agreement for a lesser
amount in the interim, with an increase in payment at the date the house is
supposed to be sold. Advise the taxpayer that enforcement may be taken at
the end of a year if the installment agreement defaults for any reason,
including because the taxpayer failed to pay the required increase. If
there is a default, the taxpayer will have to demonstrate that a good faith
effort was made to sell or borrow on the property.
|
|
6.
|
Question. A taxpayer claims her cable TV expense
of $40 per month is a necessary expense because she lives in a remote area
where reception is poor. Should this expense be allowed?
|
|
|
Answer. Yes, if we can get a full pay within five
years. But it is not a necessary expense. Also, the National Standards
include an amount for "miscellaneous" which could cover this
expense.
|
|
7.
|
Question. A taxpayer claims that she needs more
than the amount provided by the National Standards because she has five
teenage children. Can she get an increased amount?
|
|
|
Answer. Yes, if she can fully pay the tax
liability within five years. Otherwise, she has to substantiate and justify
all the expenses included within the National Standards. The fact that she
spends more than the National Standards allow for one category, such as
clothing, does not in itself constitute a justification.
|
|
8.
|
Question. A self-employed taxpayer who has no
other source of retirement income has an Individual Retirement Account
(IRA). Should payments to the IRA be allowed if it will take six years for
her to fully pay the tax liability?
|
|
|
Answer. No. Tell the taxpayer to apply the amount
going to the IRA to the tax liability, in addition to other identified
disposable income. If the taxpayer wishes to continue making IRA payments,
she must divert the money from allowed expenses.
|
|
9.
|
Question. We have a joint tax liability against a
married couple. They have submitted a Form 433-A. Our analysis indicates
that it will take a four-year installment agreement to fully pay the tax
liability. The husband is a truck driver who is responsible for his own
food and lodging expenses on the road. He usually pays these as he goes
with a credit card. He requests that this monthly payment be allowed.
Should we allow the expense?
|
|
|
Answer. First, we need to determine if these are
business expenses. If they are, they should not appear on the Form 433-A.
The income which appears on the 433-A should not reflect business expenses
which have already been deducted from business income to arrive at personal
income. If they are not business expenses and it's determined they are
necessary, they should be allowed. How they are paid, cash or credit card,
doesn't concern us. If the taxpayer needs to make minimal payments to keep
his credit card active, he should be told that the payments should come
from the amount allowed by the National Standards, which includes a
miscellaneous amount. Then monthly additions to the credit card should be
fully paid from the amount allowed for the expense.
|
|
10.
|
Question. A taxpayer completes a CIS which
indicates that she can fully pay the liability within five years Since the
assessment of the tax liability, she has increased her expenses by buying a
luxury car worth $35,000, for which she put $12,000 down. She has also
moved from an apartment costing $900 monthly to one costing $2,000 monthly.
Should the provisions of the the five-year or the one-year rule apply?
|
|
|
Answer. If it appears that she, although aware of
the tax liability, committed part of her disposable income to excessive
necessary or not-allowable conditional expenses, the Service is not
obligated to allow the excessive expenses even though the liability could
be fully paid within five years. It may be appropriate to inform the
taxpayer that for the Service to consider an agreement, she will have to
pay us immediately an amount equal to the down payment on the car and to
pay us, as part of an installment agreement, an amount equal to the
increased monthly costs of housing and the car. This amount would be in
addition to her other disposable income.
|
|
11.
|
Question. A taxpayer is contacted who has a child
in parochial school. Should the taxpayer be allowed this expense?
|
|
|
Answer. Yes, if we can get a full pay within five
years. Otherwise, the expense will be allowed if it is for a physically or
mentally challenged child and no public education providing similar
services is available. If the expense is not to be included among allowable
expenses, tell the taxpayer that he or she is responsible for deciding what
expense modifications or eliminations are needed to pay the tax liability.
|
|
12.
|
Question. Because of budget constraints, a public
school district has begun charging fees for certain services which were
previously provided free. Should a taxpayer be allowed the expense of
paying these fees?
|
|
|
Answer. Yes, if the fees are required of all
children in the school district. Fees for optional services, such as music
lessons, are allowable if the tax liability including projected accruals
will be paid within five years.
|
|
13.
|
Question. A district has an arrangement with
Consumer Credit Counseling Services (CCCS) in which CCCS submits
installment agreement proposals on behalf of the taxpayer. Will these cases
be subject to the new allowable expense procedures?
|
|
|
Answer. Yes, unless the agreement falls under the
streamlined installment agreement procedures. Any installment agreement in
which financial analysis is required will be subject to the allowable
expense guidelines. The area office must share allowable expense procedures
with CCCS.
|
|
|
|
|
Exhibit [5.15]
1-4 (11-15-2000)
Financial Analysis: Total Monthly National Standards -- Except Alaska and
Hawaii; Reference 5.15.1.1(6) (Effective 10-01-1999)
|
|
|
Total Gross Monthly Income
|
|
Number of Persons
|
|
|
|
One
|
Two
|
Three
|
Four
|
Over Four
|
|
|
Less than $830
|
345
|
466
|
579
|
726
|
+125
|
|
|
$830 to $1,249
|
391
|
525
|
646
|
762
|
+135
|
|
|
$1,250 to $1,669
|
433
|
630
|
737
|
800
|
+145
|
|
|
$1,670 to $2,499
|
527
|
685
|
781
|
830
|
+155
|
|
|
$2,500 to $3,329
|
554
|
769
|
863
|
924
|
+165
|
|
|
$3,330 to $4,169
|
620
|
830
|
948
|
1,063
|
+175
|
|
|
$4,170 to $5,829
|
773
|
957
|
1,018
|
1,170
|
+185
|
|
|
$5,830 and over
|
991
|
1,235
|
1,399
|
1,473
|
+195
|
|
|
|
|
|
Exhibit [5.15]
1-4 (11-15-2000)
Financial Analysis: Total Monthly National Standards -- Except Alaska and
Hawaii; Reference 5.15.1.1(6) (Effective 10-01-1999)
|
|
Expenses include:
|
|
|
Housekeeping supplies
|
|
|
Apparel and services
|
|
|
Personal care products and services
|
|
|
Food
|
|
|
Miscellaneous
|
|
For each person in a family with more than four persons,
add the amount in the "Over Four" column to the amount in the
"Four" column.
|
|
Normally, expenses should be allowed only for persons
who can be claimed as exemptions on the taxpayer s income tax return.
|
|
Dollar amounts are derived from the Bureau of Labor
Statistics (BLS) Consumer Expenditure Survey.
|
|
A complete breakdown by expense item of these total
monthly necessary expenses is in Exhibit 5.15.1-5.
|
|
|
|
|
Exhibit [5.15]
1-5 (11-15-2000)
Financial Analysis: Monthly National Standards -- Itemized -- Except Alaska
and Hawaii (Effective 10-01-1999) Reference 5.15.1.1(6)
|
|
ONE PERSON
|
|
Gross Monthly Income
|
|
|
|
|
|
Item
|
Less than $830
|
$830 to $1,249
|
$1,250 to $1,669
|
$1,670 to $2,499
|
$2,500 to $3,329
|
$3,330 to $4,169
|
$4,170 to $5,829
|
$5,830 and over
|
|
Food
|
170
|
198
|
214
|
257
|
270
|
325
|
428
|
456
|
|
Housekeeping supplies
|
18
|
20
|
21
|
26
|
27
|
29
|
35
|
43
|
|
Apparel and services
|
43
|
52
|
75
|
120
|
127
|
129
|
168
|
334
|
|
Personal care products & services
|
14
|
21
|
23
|
24
|
30
|
37
|
42
|
58
|
|
Miscellaneous
|
100
|
100
|
100
|
100
|
100
|
100
|
100
|
100
|
|
Total
|
345
|
391
|
433
|
527
|
554
|
620
|
773
|
991
|
|
|
|
|
Exhibit [5.15]
1-5 (11-15-2000)
Financial Analysis: Monthly National Standards -- Itemized -- Except Alaska
and Hawaii (Effective 10-01-1999) Reference 5.15.1.1(6)
|
|
|
TWO PERSONS
|
Gross Monthly
Income
|
|
|
|
|
|
Item
|
Less than $830
|
$830 to $1,249
|
$1,250 to $1,669
|
$1,670 to $2,499
|
$2,500 to $3,329
|
$3,330 to $4,169
|
$4,170 to $5,829
|
$5,830 and over
|
|
|
|
Food
|
228
|
277
|
351
|
365
|
424
|
438
|
515
|
635
|
|
|
|
Housekeeping supplies
|
23
|
27
|
28
|
40
|
46
|
51
|
57
|
74
|
|
|
|
Apparel & services
|
71
|
72
|
98
|
121
|
128
|
167
|
202
|
335
|
|
|
|
Personal care products & services
|
19
|
24
|
28
|
34
|
46
|
49
|
58
|
66
|
|
|
|
Miscellaneous
|
125
|
125
|
125
|
125
|
125
|
125
|
125
|
125
|
|
|
|
Total
|
466
|
525
|
630
|
685
|
769
|
830
|
957
|
1,235
|
|
|
|
|
|
|
Exhibit [5.15]
1-5 (11-15-2000)
Financial Analysis: Monthly National Standards -- Itemized -- Except Alaska
and Hawaii (Effective 10-01-1999) Reference 5.15.1.1(6)
|
|
|
THREE PERSONS
|
Gross Monthly
Income
|
|
|
|
|
|
Item
|
Less than $830
|
$830 to $1,249
|
$1,250 to $1,669
|
$1,670 to $2,499
|
$2,500 to $3,329
|
$3,330 to $4,169
|
$4,170 to $5,829
|
$5,830 and over
|
|
|
|
Food
|
272
|
326
|
390
|
406
|
444
|
488
|
545
|
737
|
|
|
|
Housekeeping supplies
|
24
|
28
|
29
|
41
|
47
|
55
|
58
|
77
|
|
|
|
Apparel & services
|
110
|
114
|
134
|
143
|
175
|
205
|
206
|
368
|
|
|
|
Personal care products & services
|
23
|
28
|
34
|
41
|
47
|
50
|
59
|
67
|
|
|
|
Miscellaneous
|
150
|
150
|
150
|
150
|
150
|
150
|
150
|
150
|
|
|
|
Total
|
579
|
646
|
737
|
781
|
863
|
948
|
1,018
|
1,399
|
|
|
|
|
|
|
Exhibit [5.15]
1-5 (11-15-2000)
Financial Analysis: Monthly National Standards -- Itemized -- Except Alaska
and Hawaii (Effective 10-01-1999) Reference 5.15.1.1(6)
|
|
|
FOUR PERSONS
|
Gross Monthly
Income
|
|
|
|
|
|
Item
|
Less than $830
|
$830 to $1,249
|
$1,250 to $1,669
|
$1,670 to $2,499
|
$2,500 to $3,329
|
$3,330 to $4,169
|
$4,170 to $5,829
|
$5,830 and over
|
|
|
|
Food
|
374
|
376
|
406
|
416
|
472
|
574
|
629
|
777
|
|
|
|
Housekeeping supplies
|
36
|
37
|
38
|
46
|
49
|
57
|
60
|
78
|
|
|
|
Apparel & services
|
114
|
145
|
146
|
147
|
179
|
206
|
244
|
369
|
|
|
|
Personal care products & services
|
27
|
29
|
35
|
46
|
49
|
51
|
62
|
74
|
|
|
|
Miscellaneous
|
175
|
175
|
175
|
175
|
175
|
175
|
175
|
175
|
|
|
|
Total
|
726
|
762
|
800
|
830
|
924
|
1,063
|
1,170
|
1,473
|
|
|
|
|
|
|
Exhibit [5.15]
1-5 (11-15-2000)
Financial Analysis: Monthly National Standards -- Itemized -- Except Alaska
and Hawaii (Effective 10-01-1999) Reference 5.15.1.1(6)
|
|
|
MORE THAN FOUR PERSONS
|
Gross Monthly
Income
|
|
|
|
|
|
Item
|
Less than $830
|
$830 to $1,249
|
$1,250 to $1,669
|
$1,670 to $2,499
|
$2,500 to $3,329
|
$3,330 to $4,169
|
$4,170 to $5,829
|
$5,830 and over
|
|
|
|
For each additional person, add to four-person total
allowance:
|
125
|
135
|
145
|
155
|
165
|
175
|
185
|
195
|
|
|
|
|
|
|
Exhibit [5.15]
1-6 (11-15-2000)
Financial Analysis: Total Monthly National Standards for Alaska (Effective
10-01-1999) Reference 5.15.1.1(6)
|
|
|
Total Gross Monthly Income
|
|
Number of Persons
|
|
|
|
One
|
Two
|
Three
|
Four
|
Over Four
|
|
|
Less than $830
|
414
|
558
|
693
|
869
|
+153
|
|
|
$830 to $1,249
|
469
|
628
|
773
|
916
|
+165
|
|
|
$1,250 to $1,669
|
518
|
752
|
882
|
959
|
+177
|
|
|
$1,670 to $2,499
|
627
|
817
|
935
|
994
|
+189
|
|
|
$2,500 to $3,329
|
663
|
919
|
1,031
|
1,104
|
+201
|
|
|
$3,330 to $4,169
|
743
|
991
|
1,133
|
1,271
|
+214
|
|
|
$4,170 to $5,829
|
922
|
1,145
|
1,216
|
1,398
|
+226
|
|
|
$5,830 and over
|
1,183
|
1,474
|
1,668
|
1,756
|
+238
|
|
|
|
|
|
Exhibit [5.15]
1-6 (11-15-2000)
Financial Analysis: Total Monthly National Standards for Alaska (Effective
10-01-1999) Reference 5.15.1.1(6)
|
|
Expenses include:
|
|
|
Housekeeping supplies
|
|
|
Apparel and services
|
|
|
Personal care products and services
|
|
|
Food
|
|
|
Miscellaneous
|
|
For each person in a family with more than four persons,
add the amount in the "Over Four" column to the amount in the
"Four" column.
|
|
Normally, expenses should be allowed only for persons
who can be claimed as exemptions on the taxpayer s income tax return.
|
|
Dollar amounts are derived from the Bureau of Labor
Statistics (BLS) Consumer Expenditure Survey.
|
|
A complete breakdown by expense item of these total
monthly necessary expenses is in Exhibit 5.15.1-7.
|
|
|
|
|
Exhibit [5.15]
1-7 (11-15-2000)
Financial Analysis: Monthly National Standards for Alaska -- Itemized
(Effective 10-01-1999) Reference 5.15.1.1(6)
|
|
|
ONE PERSON
|
Gross Monthly
Income
|
|
|
|
|
|
Item
|
Less than $830
|
$830 to $1,249
|
$1,250 to $1,669
|
$1,670 to $2,499
|
$2,500 to $3,329
|
$3,330 to $4,169
|
$4,170 to $5,829
|
$5,830 and over
|
|
|
|
Food
|
202
|
235
|
255
|
305
|
322
|
388
|
509
|
543
|
|
|
|
Housekeeping supplies
|
22
|
24
|
26
|
30
|
32
|
36
|
42
|
51
|
|
|
|
Apparel & services
|
51
|
62
|
88
|
142
|
150
|
153
|
199
|
398
|
|
|
|
Personal care products & services
|
17
|
26
|
27
|
28
|
37
|
44
|
50
|
69
|
|
|
|
Miscellaneous
|
122
|
122
|
122
|
122
|
122
|
122
|
122
|
122
|
|
|
|
Total
|
414
|
469
|
518
|
627
|
663
|
743
|
922
|
1,183
|
|
|
|
|
|
|
Exhibit [5.15]
1-7 (11-15-2000)
Financial Analysis: Monthly National Standards for Alaska -- Itemized
(Effective 10-01-1999) Reference 5.15.1.1(6)
|
|
|
TWO PERSONS
|
Gross Monthly
Income
|
|
|
|
|
|
Item
|
Less than $830
|
$830 to $1,249
|
$1,250 to $1,669
|
$1,670 to $2,499
|
$2,500 to $3,329
|
$3,330 to $4,169
|
$4,170 to $5,829
|
$5,830 and over
|
|
|
|
Food
|
271
|
330
|
416
|
433
|
504
|
521
|
613
|
755
|
|
|
|
Housekeeping supplies
|
27
|
32
|
33
|
48
|
55
|
61
|
68
|
87
|
|
|
|
Apparel & services
|
84
|
85
|
117
|
143
|
152
|
198
|
242
|
400
|
|
|
|
Personal care products & services
|
23
|
28
|
33
|
40
|
55
|
58
|
69
|
79
|
|
|
|
Miscellaneous
|
153
|
153
|
153
|
153
|
153
|
153
|
153
|
153
|
|
|
|
Total
|
558
|
628
|
752
|
817
|
919
|
991
|
1,145
|
1,474
|
|
|
|
|
|
|
Exhibit [5.15]
1-7 (11-15-2000)
Financial Analysis: Monthly National Standards for Alaska -- Itemized
(Effective 10-01-1999) Reference 5.15.1.1(6)
|
|
|
THREE PERSONS
|
Gross Monthly
Income
|
|
|
|
|
|
Item
|
Less than $830
|
$830 to $1,249
|
$1,250 to $1,669
|
$1,670 to $2,499
|
$2,500 to $3,329
|
$3,330 to $4,169
|
$4,170 to $5,829
|
$5,830 and over
|
|
|
|
Food
|
324
|
389
|
464
|
483
|
528
|
580
|
648
|
877
|
|
|
|
Housekeeping supplies
|
28
|
33
|
36
|
49
|
56
|
66
|
69
|
91
|
|
|
|
Apparel & services
|
131
|
135
|
159
|
171
|
208
|
244
|
246
|
437
|
|
|
|
Personal care products & services
|
27
|
33
|
40
|
49
|
56
|
60
|
70
|
80
|
|
|
|
Miscellaneous
|
183
|
183
|
183
|
183
|
183
|
183
|
183
|
183
|
|
|
|
Total
|
693
|
773
|
882
|
935
|
1,031
|
1,133
|
1,216
|
1,668
|
|
|
|
|
|
|
Exhibit [5.15]
1-7 (11-15-2000)
Financial Analysis: Monthly National Standards for Alaska -- Itemized
(Effective 10-01-1999) Reference 5.15.1.1(6)
|
|
|
FOUR PERSONS
|
Gross Monthly
Income
|
|
|
|
|
|
Item
|
Less than $830
|
$830 to $1,249
|
$1,250 to $1,669
|
$1,670 to $2,499
|
$2,500 to $3,329
|
$3,330 to $4,169
|
$4,170 to $5,829
|
$5,830 and over
|
|
|
|
Food
|
445
|
448
|
483
|
494
|
562
|
682
|
748
|
925
|
|
|
|
Housekeeping supplies
|
43
|
44
|
45
|
55
|
58
|
68
|
72
|
92
|
|
|
|
Apparel & services
|
135
|
174
|
175
|
176
|
212
|
246
|
290
|
438
|
|
|
|
Personal care products & services
|
32
|
36
|
42
|
55
|
58
|
61
|
74
|
87
|
|
|
|
Miscellaneous
|
214
|
214
|
214
|
214
|
214
|
214
|
214
|
214
|
|
|
|
Total
|
869
|
916
|
959
|
994
|
1,104
|
1,271
|
1,398
|
1,756
|
|
|
|
|
|
|
Exhibit [5.15]
1-7 (11-15-2000)
Financial Analysis: Monthly National Standards for Alaska -- Itemized
(Effective 10-01-1999) Reference 5.15.1.1(6)
|
|
|
MORE THAN FOUR PERSONS
|
Gross Monthly
Income
|
|
|
|
|
|
Item
|
Less than $830
|
$830 to $1,249
|
$1,250 to $1,669
|
$1,670 to $2,499
|
$2,500 to $3,329
|
$3,330 to $4,169
|
$4,170 to $5,829
|
$5,830 and over
|
|
|
|
For each additional person, add to four-person total
allowance:
|
153
|
165
|
177
|
189
|
201
|
214
|
226
|
238
|
|
|
|
|
|
|
Exhibit [5.15]
1-8 (11-15-2000)
Financial Analysis: Total Monthly National Standards for Hawaii (Effective
10-01-1999) Reference 5.15.1.1(6)
|
|
|
Total Gross Monthly Income
|
|
Number of Persons
|
|
|
|
One
|
Two
|
Three
|
Four
|
Over Four
|
|
|
Less than $830
|
373
|
501
|
622
|
781
|
+138
|
|
|
$830 to $1,249
|
423
|
564
|
695
|
820
|
+150
|
|
|
$1,250 to $1,669
|
466
|
675
|
790
|
860
|
+161
|
|
|
$1,670 to $2,499
|
565
|
732
|
838
|
892
|
+172
|
|
|
$2,500 to $3,329
|
595
|
824
|
925
|
993
|
+183
|
|
|
$3,330 to $4,169
|
665
|
887
|
1,016
|
1,139
|
+194
|
|
|
$4,170 to $5,829
|
826
|
1,026
|
1,090
|
1,254
|
+205
|
|
|
$5,830 and over
|
1,061
|
1,323
|
1,497
|
1,578
|
+216
|
|
|
|
|
|
Exhibit [5.15]
1-8 (11-15-2000)
Financial Analysis: Total Monthly National Standards for Hawaii (Effective
10-01-1999) Reference 5.15.1.1(6)
|
|
Expenses include:
|
|
|
Housekeeping supplies
|
|
|
Apparel and services
|
|
|
Personal care products and services
|
|
|
Food
|
|
|
Miscellaneous
|
|
For each person in a family with more than four persons,
add the amount in the "Over Four" column to the amount in the
"Four" column.
|
|
Normally, expenses should be allowed only for persons
who can be claimed as exemptions on the taxpayer s income tax return.
|
|
Dollar amounts are derived from the Bureau of Labor
Statistics (BLS) Consumer Expenditure Survey.
|
|
A complete breakdown by expense item of these total
monthly necessary expenses is in Exhibit 5.15.1-9.
|
|
|
|
|
Exhibit [5.15]
1-9 (11-15-2000)
Financial Analysis: Monthly National Standards for Hawaii -- Itemized
(Effective 10-01-1999) Reference 5.15.1.1(6)
|
|
|
ONE PERSON
|
Gross Monthly
Income
|
|
|
|
|
|
Item
|
Less than $830
|
$830 to $1,249
|
$1,250 to $1,669
|
$1,670 to $2,499
|
$2,500 to $3,329
|
$3,330 to $4,169
|
$4,170 to $5,829
|
$5,830 and over
|
|
|
|
Food
|
181
|
212
|
228
|
274
|
288
|
347
|
456
|
486
|
|
|
|
Housekeeping supplies
|
20
|
22
|
23
|
28
|
29
|
31
|
37
|
45
|
|
|
|
Apparel & services
|
45
|
55
|
80
|
127
|
135
|
137
|
178
|
357
|
|
|
|
Personal care products & services
|
16
|
23
|
24
|
25
|
32
|
39
|
44
|
62
|
|
|
|
Miscellaneous
|
111
|
111
|
111
|
111
|
111
|
111
|
111
|
111
|
|
|
|
Total
|
373
|
423
|
466
|
565
|
595
|
665
|
826
|
1,061
|
|
|
|
|
|
|
Exhibit [5.15]
1-9 (11-15-2000)
Financial Analysis: Monthly National Standards for Hawaii -- Itemized
(Effective 10-01-1999) Reference 5.15.1.1(6)
|
|
|
TWO PERSONS
|
Gross Monthly
Income
|
|
|
|
|
|
Item
|
Less than $830
|
$830 to $1,249
|
$1,250 to $1,669
|
$1,670 to $2,499
|
$2,500 to $3,329
|
$3,330 to $4,169
|
$4,170 to $5,829
|
$5,830 and over
|
|
|
|
Food
|
243
|
296
|
373
|
389
|
452
|
466
|
549
|
677
|
|
|
|
Housekeeping supplies
|
24
|
29
|
30
|
42
|
49
|
54
|
61
|
79
|
|
|
|
Apparel & services
|
75
|
76
|
104
|
128
|
136
|
177
|
216
|
358
|
|
|
|
Personal care products & services
|
21
|
25
|
30
|
35
|
49
|
52
|
62
|
71
|
|
|
|
Miscellaneous
|
138
|
138
|
138
|
138
|
138
|
138
|
138
|
138
|
|
|
|
Total
|
501
|
564
|
675
|
732
|
824
|
887
|
1,026
|
1,323
|
|
|
|
|
|
|
Exhibit [5.15]
1-9 (11-15-2000)
Financial Analysis: Monthly National Standards for Hawaii -- Itemized
(Effective 10-01-1999) Reference 5.15.1.1(6)
|
|
|
THREE PERSONS
|
Gross Monthly
Income
|
|
|
|
|
|
Item
|
Less than $830
|
$830 to $1,249
|
$1,250 to $1,669
|
$1,670 to $2,499
|
$2,500 to $3,329
|
$3,330 to $4,169
|
$4,170 to $5,829
|
$5,830 and over
|
|
|
|
Food
|
290
|
348
|
415
|
433
|
473
|
520
|
580
|
785
|
|
|
|
Housekeeping supplies
|
25
|
30
|
31
|
43
|
50
|
59
|
62
|
82
|
|
|
|
Apparel & services
|
117
|
121
|
143
|
153
|
186
|
218
|
219
|
392
|
|
|
|
Personal care products & services
|
24
|
30
|
35
|
43
|
50
|
53
|
63
|
72
|
|
|
|
Miscellaneous
|
166
|
166
|
166
|
166
|
166
|
166
|
166
|
166
|
|
|
|
Total
|
622
|
695
|
790
|
838
|
925
|
1,016
|
1,090
|
1,497
|
|
|
|
|
|
Internal Revenue Manual
|
Hndbk. 5.15 Chap. 1 Analyzing Financial
Information
|
(11-15-2000
|
|