Navigating IRS Wage Levy and Hardship in Haakon County, South Dakota

When the IRS assesses your ability to pay a tax debt, they utilize a detailed financial analysis documented on Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals. This process determines your 'disposable income' by subtracting necessary living expenses from your gross income. The IRS employs National Standards for categories like Food, Clothing, and Other, and Local Standards for Housing & Utilities and Transportation. For a single individual in Haakon County, SD, the National Standard for Food, Clothing & Other is $812 per month. While specific IRS Local Standards for Housing & Utilities are not available for Haakon County, taxpayers are generally allowed their actual reasonable expenses, often benchmarked against local market rates. These standards are crucial for establishing 'economic hardship,' which, under IRC §6343(a)(1)(D), can justify the release of a levy. This critical data is sourced from IRS.gov Collection Financial Standards, which itself is derived from the Bureau of Labor Statistics (BLS) and US Census Bureau data.

For residents of Haakon County, South Dakota, the IRS Collection Financial Standards do not provide a specific Local Standard for Housing & Utilities (listed as $N/A for all household sizes). In such instances, the IRS will evaluate a taxpayer's actual reasonable housing and utility expenses. It's vital to compare these actual costs against local market data. For example, the HUD FY2025 Fair Market Rent (FMR) for a 2-bedroom unit in Haakon County is $1010.0 per month. If your actual housing expenses, including utilities, exceed what the IRS might deem reasonable, you can argue for a deviation from standard allowances as outlined in IRM 5.15.1.10, 'Financial Analysis Handbook.' This argument is particularly strong if your rent or mortgage significantly surpasses an amount like the $1010.0 HUD FMR, demonstrating a legitimate need for higher expenses. Unfortunately, specific regional shelter CPI data (Year-over-Year) is not available for this region from the Bureau of Labor Statistics, which could otherwise support rising housing costs.

Beyond housing, the IRS allows for other essential living expenses. The National Standards for Food, Clothing, and Other Living Expenses provide a consistent baseline across the U.S. For Haakon County, SD, these monthly allowances range from $812 for a 1-person household to $1983 for a 4-person household, with an additional $357 for each subsequent person. These figures are derived from the Bureau of Labor Statistics Consumer Expenditure Survey. Healthcare is another critical allowance; the IRS provides a monthly Out-of-Pocket Healthcare Standard of $75 per person for those under 65 and $153 per person for those 65 and over, based on the Medical Expenditure Panel Survey. For transportation in Haakon County, the IRS Local Standards (derived from BLS data and American Automobile Association operating costs) allow $588 per month for the ownership of one car and $270 for its operating costs in the region, totaling $858 per month for a single vehicle. For two cars, the allowance increases to $1176 for ownership, plus the operating costs.

Achieving Currently Not Collectible (CNC) status in South Dakota, including Haakon County, means the IRS has determined you lack the financial ability to pay your tax debt. To qualify, you must submit a detailed Form 433-A, Collection Information Statement, outlining your income, assets, and expenses. The IRS will compare your total allowable monthly expenses against your total monthly income. For a single filer in Haakon County, for instance, if their total allowable expenses (e.g., $1010.0 for housing based on HUD FMR, $812 for food/clothing/other, $75 for healthcare, and $858 for transportation) exceed their income, they could be placed into CNC status. This status, detailed in IRM 5.16.1, 'Currently Not Collectible,' means the IRS will temporarily cease collection efforts, including the release of existing levies under IRC §6343. It's crucial to understand that CNC status does not forgive the debt; interest and penalties continue to accrue. However, it allows the Collection Statute Expiration Date (CSED), governed by IRC §6502 (a 10-year collection window), to continue running without extension, potentially leading to the debt expiring.