“IRS Issues 2007 Allowable Living Expenses Standards” by Frank C. Carnahan

The new standards are effective October 1, 2007. The IRS standards are used to determine installment and offer in compromise amounts. The standards have been redesigned to:

• add a new category for per person out of pocket health care expense with separate limits for those under and over age 65 (documentation only required if the amount claimed exceeds the standard)
• eliminate income ranges for national standards for food, clothing and other items
• provide a single nationwide national standard expense table, eliminating separate tables for Alaska and Hawaii
• expand the number of household categories for housing and utilities
• add an allowance for cell phone costs in housing and utilities
• provide equal allowances for the 1st and 2nd vehicles under transportation expenses rather than a reduced amount for the 2nd vehicle
• provide fewer Metropolitan Statistical Areas for vehicle operating costs
• separate the nationwide public transportation allowance

If the amount claimed is more than allowed by the national standards, the taxpayer must provide documentation to substantiate those expenses are necessary living expenses. For more information seehttp://carnahalaw.com/IRS/collectionstd.html.