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IRS Wage Levy & Hardship Relief in Denver-Aurora-Centennial, Colorado

Last updated: May 29, 2026 · Sources: IRS.gov, HUD.gov, BLS.gov

Understanding IRS Collection Standards in Denver-Aurora-Centennial, CO MSA

When facing IRS enforced collection actions in the Denver-Aurora-Centennial, CO MSA, the IRS evaluates your ability to pay through a detailed financial analysis, typically using Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals. This assessment determines your disposable income by comparing your gross monthly income against a set of IRS-determined allowable expenses, known as National and Local Standards. For instance, a single individual in Colorado is permitted a National Standard expense of $812 for food, clothing, and other necessities. While the IRS does not publish a specific local housing standard for this region, actual reasonable housing expenses are considered. These standards are derived from comprehensive data provided by IRS.gov, the Bureau of Labor Statistics (BLS), and the U.S. Census Bureau. If your allowable expenses exceed your income, you may qualify for economic hardship status under IRC §6343(a)(1)(D), potentially leading to a levy release or Currently Not Collectible (CNC) status.

Denver-Aurora-Centennial Housing & Utilities Allowance vs. HUD Fair Market Rent

For taxpayers in the Denver-Aurora-Centennial, CO MSA, the IRS does not publish a specific local standard for housing and utilities. This means the IRS generally allows taxpayers to claim their actual, reasonable, and necessary housing and utility expenses. However, the Department of Housing and Urban Development (HUD) provides a useful benchmark: the FY2025 Fair Market Rent (FMR) for a 2-bedroom apartment in this area is $2060.0. If your actual housing costs exceed what the IRS deems reasonable, you may need to argue for a deviation based on your specific circumstances, a process outlined in Internal Revenue Manual (IRM) 5.15.1.10. High FMR data, such as the $2060.0 for a 2BR, can strongly support a claim that your actual expenses are reasonable and necessary, especially when compared to a non-existent IRS standard. Unfortunately, regional Shelter Consumer Price Index (CPI) year-over-year data for this specific region is not available from the Bureau of Labor Statistics to provide further direct context on increasing housing costs.

Food, Healthcare & Transportation Allowances

Beyond housing, the IRS allows specific National and Local Standard expenses for other essential living costs. For food, clothing, and other necessities, National Standards range from $812 per month for a single individual to $1983 for a family of four, based on the Bureau of Labor Statistics Consumer Expenditure Survey. Healthcare allowances are also provided, with $75 per month for individuals under 65 and $153 per month for those 65 and over, per person, derived from the Medical Expenditure Panel Survey. For transportation, the Denver-Aurora-Centennial, CO MSA has a Local Standard. A single vehicle ownership allowance is $588 per month, and the operating cost allowance for this region is $270 per month, totaling $858 for one vehicle. For two vehicles, the total allowance is $1446. These figures are based on Bureau of Labor Statistics data and American Automobile Association operating costs, ensuring a realistic assessment of necessary expenses.

Qualifying for Currently Not Collectible (CNC) Status in Colorado

Achieving Currently Not Collectible (CNC) status in Colorado means the IRS has determined you lack the financial ability to pay your tax debt. To qualify, you must submit a detailed financial statement, typically Form 433-A, demonstrating that your necessary monthly living expenses exceed your monthly income. For a single filer in the Denver-Aurora-Centennial, CO MSA, a calculation might include actual reasonable housing (using HUD FMR as a guide, e.g., $2060.0 for a 2BR), plus $812 for National Standard food/clothing/other, $75 for healthcare (under 65), and $858 for one-car transportation. This totals $3895.0 in basic allowable expenses. If your net income is less than this amount, you may qualify. IRM 5.16.1 outlines the procedures for CNC status, which can lead to the release of an IRS wage levy (Form 668-W) or bank levy (Form 668-A) under IRC §6343. Importantly, while in CNC, the 10-year Collection Statute Expiration Date (CSED) under IRC §6502 continues to run, offering a strategic advantage as the IRS is not actively collecting.

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Frequently Asked Questions

For the Denver-Aurora-Centennial, CO MSA, the IRS does not publish a specific local housing and utilities standard in its Collection Financial Standards. Instead, taxpayers are generally allowed to claim their actual, reasonable, and necessary housing and utility expenses. The IRS will evaluate these expenses to ensure they are appropriate for the taxpayer's circumstances. A useful benchmark for what constitutes a reasonable expense in this area is the HUD FY2025 Fair Market Rent (FMR), which for a 2-bedroom apartment is $2060.0 per month. Taxpayers should be prepared to document their actual expenses and, if necessary, justify why their costs are reasonable and necessary if they exceed common local rates.
To qualify for Currently Not Collectible (CNC) status in Colorado, you must demonstrate to the IRS that you cannot afford to pay your tax debt after covering your essential living expenses. This process typically involves submitting IRS Form 433-A, Collection Information Statement, which details your income, assets, and monthly expenses. The IRS compares your income to its National and Local Standards. For example, a single person's allowable expenses would include $812 for food/clothing/other and $858 for one-car transportation, plus reasonable actual housing expenses. If your total allowable expenses, as defined by IRM 5.16.1, leave you with no disposable income to pay the tax debt, the IRS may place your account in CNC status due to economic hardship under IRC §6343(a)(1)(D). While in CNC, the IRS suspends active collection, but interest and penalties continue to accrue.
When the IRS issues a wage levy (Form 668-W) in the Denver-Aurora-Centennial, CO MSA, the amount taken from your paycheck is not a fixed percentage like some state garnishments. Instead, it is calculated based on your filing status and the number of dependents you claim, as specified in IRS Publication 1494. For 2025, a single taxpayer with zero dependents has $1096.67 of their monthly wages exempt from levy. If that single taxpayer claims one dependent, the exempt amount increases to $1680.0 per month. Any earnings above this exemption amount are subject to the levy. These amounts are designed to leave taxpayers with sufficient funds for basic living expenses. It's crucial to understand these specific exemption thresholds to assess the impact of an IRS wage levy.
If your rent exceeds the IRS standard in the Denver-Aurora-Centennial, CO MSA, it's important to know that the IRS does not publish a specific local housing standard for this area. Therefore, the IRS generally allows taxpayers to claim their actual, reasonable, and necessary housing expenses. The HUD FY2025 Fair Market Rent (FMR) for a 2-bedroom apartment in this area is $2060.0, which can serve as a strong indicator of reasonable costs. If your actual rent is higher than typical local rates, you must be prepared to justify it as necessary, perhaps due to family size, health needs, or lack of affordable alternatives. IRM 5.15.1.10 outlines the process for requesting a deviation from standard allowances, emphasizing that all expenses must be necessary and reasonable.
The IRS generally has 10 years to collect a tax debt, a period known as the Collection Statute Expiration Date (CSED), as outlined in Internal Revenue Code (IRC) §6502. This 10-year clock typically starts from the date the tax was assessed. While certain events can pause or extend the CSED, such as filing for bankruptcy or an Offer in Compromise, entering Currently Not Collectible (CNC) status (IRM 5.16.1) does NOT extend the CSED. This means that if your account is placed in CNC status, the 10-year collection window continues to run. For many taxpayers, qualifying for CNC status is a strategic move, as it stops active collection efforts while the statutory period for collection continues to expire, potentially leading to the debt becoming uncollectible after 10 years.

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