WHEN THE IRS GETS NOSY

When you owe back taxes to the IRS, they suddenly become very interested in your personal financial affairs.

They’re going to start poking their nose into things that you’ve never seen the IRS be interested in, such as your:

• >Housing costs
• >Car payment, gas, and insurance
• >Gas, water, electric, and other utility bills
• >Groceries and dining out

…and much more.

Why on Earth would the IRS ever care how much you’re spending on your cell phone plan, water bill, or streaming service each month?

It all comes down to the Allowable Living Expenses (ALE).

The moment you become a tax debtor; the IRS has an automatic lien against everything you own including your future income. This is a feature of federal law, and it’s the basis for all the other collection actions that the government can take against you such as seizing money and property.

Due to that lien, the IRS legally has a say in how you spend your money. Nobody likes this, obviously, but it’s the reality of how the US tax code is currently written.

There is a long and complicated list of rules and factors that go into determining what place the IRS holds in line behind or ahead of your other creditors. Bottom line? The IRS wants to get paid. And they have the power to make your life a nightmare by enforcing the control they have over your money and assets.

It’s not all bad, however. There are specific protections that exist to prevent the IRS from taking everything you have. In simple terms, the IRS is not allowed to make you destitute – aka put your family out on the street or force your children to starve.

This is where those Allowable Living Expenses (ALE) come in. The IRS does an analysis every year of what middle-class families spend on the following broad categories:

• >Food, clothing, personal care products, and “miscellaneous”
• >Out of pocket health care costs
• >Vehicle ownership and operating costs
• >Rent or mortgage
• >Utilities, including gas, water, electric, cell phone, Internet, and more

For vehicle operating costs, housing, and utilities, they do take into account regional variations in these costs. The rest are all based on national numbers. All the numbers also have adjustments based on family size.

These numbers “dictate” what the IRS will allow you to spend every month to live. Your income, when compared to these allowable standards, is what determines which IRS tax debt resolution programs you are eligible for.

If your income is less than the total monthly ALE for your area and family size, you might be eligible for a program that allows you to pay the IRS nothing. Yes, nothing. Zero. Nada. Zilch.

If your income is also less than the total monthly ALE they calculate for you, but you have assets – such as lots of equity in your home, stocks, bonds, classic cars, crypto, or the world’s most valuable Beanie Baby collection – then they’re going to take into consideration the value of those assets, too. But, in such a situation, you may be able to settle your tax debt for less than what you owe and walk away from the rest.

If your income is more than the ALE calculation, then the IRS is going to consider that “excess” income for a reduced settlement. If you’re not eligible for a reduced settlement – which most people are not – then this “excess” income becomes the monthly payment the IRS wants to see from you every month.

Time For A “Tax Resolution” Specialist

One of the first things that The Tax Resolutions Specialist undertakes is to conduct the exact same detailed financial analysis that the IRS will do. They do this for a number of reasons including:

1. >Determining which IRS programs, you’re eligible for.
2. >Seeking opportunities to legally and ethically increase the ALE numbers for you.
3. >Looking for unique circumstances that might open doors to outside-the-box resolution options.

This financial analysis is crucial preparation to get the best possible deal for you. Since the vast majority of tax debtors will end up on a monthly payment plan to the IRS, the Tax Resolution Specialist’s job is to help get you the smallest possible monthly payment and help you minimize the short-term financial impact on your budget.

If you’re in a situation where the IRS is hounding you for personal financial information of this nature, that is the trigger for you to get help. You don’t want to wind up in a place where the IRS simply pigeon-holes you into the situation that is most convenient for them leaving you unable to pay other monthly bills.

As painful as taking actions is…it’s way better to be proactive. Waiting only adds to the stress and the financial burden.

Intend to get back in good standing with the IRS.

Intend to stay in good standing with the IRS.

BE THE ROAR not the echo®

Janet Behm