IRS Revises Measure of Ability to Pay


The IRS has updated the Collection Financial Standards used to determine a taxpayer’s ability to pay a delinquent tax liability. The changes went into effect Oct. 1. For bankruptcy purposes, the new tables are not effective until Jan. 1, 2008.

The revised standards include some basic changes such as the elimination of income ranges for National Standard Expenses (for food, clothing and other household items) and the creation of a new category for out-of-pocket health care costs. Other changes include:

Elimination of separate standard expense tables for Alaska and Hawaii.
Allowance for cell phones under housing and utility expenses.
Equal allowances for first and second vehicles.
Creation of a public transportation allowance.

The standards are intended to gauge expenses that are necessary for a delinquent taxpayer to provide for the health and welfare of his or her household. The IRS may still allow actual expenses if a taxpayer can provide documentation to indicate the standards are inadequate to provide for basic living expenses.

The revised standards are available at www.irs.gov/individuals/article/0,,id=96543,00.htm.

SPONSORED REPORT

Keeping client information safe in an age of scams and security threats

A look at the Dirty Dozen tax scams and ways to protect taxpayer information.

TECHNOLOGY Q&A

How to create maps in Excel 2016

Microsoft Excel 2016 has two new mapping capabilities. J. Carlton Collins, CPA, demonstrates how to make masterful 2D and 3D maps in Excel 2016.

QUIZ

News quiz: IRS enforcement, a hot job, and audit value

The IRS’s 2016 Data Book, a “hot job” of particular interest at this time of year, and insight into how executive and audit committees view the insights from financial statement audits received attention recently. See how much you know with this short quiz.