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Fayette County, Indiana IRS Wage Levy & Hardship Relief

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

Understanding IRS Collection Standards in Fayette County

For taxpayers in Fayette County, Indiana, facing IRS collection actions, understanding the Internal Revenue Service's Collection Financial Standards is crucial. When evaluating a taxpayer's ability to pay, the IRS uses Form 433-A, Collection Information Statement, to calculate disposable income. This calculation incorporates both National and Local Standards for various living expenses. For instance, the National Standards for Food and Clothing allow $812 per month for a single individual, escalating to $1983 for a family of four. While specific housing and utilities allowances for Fayette County are currently listed as $N/A, the IRS will consider actual, reasonable expenses. If your financial situation demonstrates that enforcing collection would create economic hardship, IRC §6343(a)(1)(D) allows for the release of levies. These standards are derived from authoritative sources like IRS.gov, Bureau of Labor Statistics (BLS) data, and the US Census Bureau, ensuring a standardized approach to evaluating financial capacity.

Fayette County Housing & Utilities Allowance vs. HUD Fair Market Rent

In Fayette County, Indiana, the IRS Collection Financial Standards currently list the housing and utilities allowance as $N/A across all household sizes. This is a significant distinction, as it means the IRS will generally allow taxpayers to claim their actual, reasonable housing and utility expenses, rather than being restricted to a fixed standard amount. For context, the HUD FY2025 Fair Market Rent (FMR) for a 2-bedroom unit in Fayette County is $1330.0 per month. If a taxpayer's actual rent or mortgage payment exceeds this figure, it can be included in their expense calculations on Form 433-A. The Internal Revenue Manual (IRM 5.15.1.10) provides guidance for "deviation from national and local standards," allowing for higher expenses if justified by individual circumstances. This is particularly relevant if your housing costs surpass typical FMRs, strengthening an argument for a deviation. Unfortunately, specific regional Shelter CPI data for Fayette County is not available to provide a year-over-year comparison.

Food, Healthcare & Transportation Allowances

Beyond housing, the IRS Collection Financial Standards provide specific allowances for essential living expenses. For food, clothing, and other necessities, the National Standards, based on the Bureau of Labor Statistics Consumer Expenditure Survey, provide $812 for a single person, $1478 for a two-person household, $1697 for three, and $1983 for a four-person household, with an additional $357 for each extra person. Out-of-pocket healthcare expenses are also standardized, allowing $75 per person per month for those under 65 and $153 per person per month for those 65 and over, derived from the Medical Expenditure Panel Survey. Transportation allowances for Fayette County, IN, are based on IRS Local Standards, incorporating BLS data and American Automobile Association costs. A household with one car is allowed $588 for ownership costs plus $270 for operating costs (for the region), totaling $858 per month. For two cars, the total allowance is $1176 for ownership and $270 for operating, reaching $1446 per month.

Qualifying for Currently Not Collectible (CNC) Status in Indiana

For taxpayers in Fayette County, Indiana, who are experiencing severe financial hardship, Currently Not Collectible (CNC) status provides temporary relief from IRS enforced collection. To qualify, you must demonstrate through IRS Form 433-A that your total allowable monthly expenses meet or exceed your monthly income, leaving no disposable income for tax payments. For a single filer in Fayette County, this calculation would involve summing expenses like their actual, reasonable housing costs (e.g., up to the HUD FMR of $1330.0 for a 2-bedroom unit), the National Standard for food and other necessities ($812), the National Standard for healthcare ($75 if under 65), and the Local Standard for transportation ($858 for one car). If this total sum is greater than or equal to your income, the IRS may deem you CNC. IRM 5.16.1 outlines the procedures for CNC status, which mandates the release of any existing levies under IRC §6343. Importantly, while CNC status pauses collection, it does not stop the Collection Statute Expiration Date (CSED) from running, meaning the 10-year collection window under IRC §6502 continues. This makes CNC a strategic option for managing tax debt until your financial situation improves or the CSED expires.

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Frequently Asked Questions

For Fayette County, Indiana, the IRS Collection Financial Standards for Housing and Utilities are listed as $N/A across all household sizes for 2025. This means that instead of a fixed standard, the IRS will typically allow taxpayers to claim their actual, reasonable housing and utility expenses on IRS Form 433-A. This is a crucial benefit, as it provides flexibility for taxpayers whose housing costs might differ significantly from national averages. For reference, the HUD FY2025 Fair Market Rent for a 2-bedroom unit in Fayette County is $1330.0. If your legitimate housing costs exceed this, you can still include them in your expense calculation, provided they are deemed reasonable by the IRS. This approach allows for a more personalized assessment of your ability to pay.
To qualify for Currently Not Collectible (CNC) status in Indiana, you must demonstrate to the IRS that your total allowable monthly living expenses, as determined by IRS National and Local Standards, meet or exceed your monthly income. This process begins by filing IRS Form 433-A, Collection Information Statement, detailing your income, assets, and expenses. For a single individual in Fayette County, typical allowable expenses might include $812 for food, clothing, and other items, $75 for healthcare (if under 65), $858 for transportation (for one car), and their actual, reasonable housing costs (e.g., up to the HUD FMR of $1330.0 for a 2-bedroom unit). If your expenses leave you with no disposable income, the IRS may place your account in CNC status under IRM 5.16.1, temporarily halting collection efforts like wage levies (Form 668-W) and bank levies (Form 668-A), without extending the 10-year Collection Statute Expiration Date (CSED) under IRC §6502.
When the IRS issues a wage levy (Form 668-W, Notice of Levy on Wages, Salary, and Other Income) in Fayette County, Indiana, it cannot seize your entire paycheck. A specific portion of your wages is legally exempt from the levy, designed to ensure you retain funds for basic living expenses. According to IRS Publication 1494 for 2025, the monthly exempt amount for a single individual with no dependents is $1096.67. If that single individual has one dependent, the exemption increases to $1680.0 per month. For a married couple filing jointly with one dependent, the exempt amount is $2286.67 per month. Only the income exceeding these precise exemption thresholds can be garnished by the IRS. Indiana's state wage garnishment laws adhere to federal Consumer Credit Protection Act (CCPA) limits, which are generally less stringent than IRS levy exemptions.
In Fayette County, Indiana, the IRS Collection Financial Standards do not specify a fixed housing and utilities allowance (listed as $N/A). This is advantageous because it means the IRS considers your actual, reasonable housing expenses when determining your ability to pay. If your rent, for example, is $1500.0 per month, and the HUD FY2025 Fair Market Rent for a 2-bedroom unit in Fayette County is $1330.0, the IRS may still allow your full $1500.0 if it's considered reasonable for your circumstances. The Internal Revenue Manual (IRM 5.15.1.10) explicitly outlines procedures for requesting a "deviation from national and local standards" when your legitimate expenses exceed the typical allowances. Providing documentation to support these higher costs on Form 433-A can strengthen your argument and ensure your true financial picture is reflected.
The IRS generally has 10 years to collect a tax debt, a period known as the Collection Statute Expiration Date (CSED), as mandated by Internal Revenue Code (IRC) §6502. This 10-year clock typically begins from the date the tax was assessed. However, certain events can pause or 'toll' this statute, such as filing for bankruptcy, submitting an Offer in Compromise (Form 656), or requesting a Collection Due Process (CDP) hearing. A critical point for taxpayers in Fayette County, IN, is that being placed in Currently Not Collectible (CNC) status under IRM 5.16.1 does NOT extend the CSED. While CNC status temporarily halts active collection efforts, including wage levies (Form 668-W) and bank levies (Form 668-A), the 10-year collection period continues to run. This makes CNC a strategic option for managing tax debt, potentially allowing the CSED to expire while collection actions are suspended.

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