Hawaii County, Hawaii: Navigating IRS Wage Levies and Hardship Status

When the IRS seeks to collect a tax debt in Hawaii County, HI, they evaluate a taxpayer's ability to pay through a detailed financial analysis, often documented on IRS Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals. This process aims to determine your disposable income by comparing your gross income against a set of IRS-allowable living expenses, known as Collection Financial Standards. These standards are divided into National Standards (for food, clothing, personal care, and misc.) and Local Standards (for housing, utilities, and transportation). For a single individual in Hawaii County, the IRS National Standards allow for $812 per month for food, clothing, and other necessary expenses. While specific IRS Local Housing and Utilities Standards are not provided for Hawaii County, the IRS may allow actual, reasonable expenses. The ultimate goal is to ascertain if enforcing collection would create an 'economic hardship,' a condition under which the IRS may be compelled to release a levy, as outlined in IRC §6343(a)(1)(D). These critical financial benchmarks are derived from various authoritative sources including IRS.gov, the Bureau of Labor Statistics (BLS), and the U.S. Census Bureau American Community Survey.

For taxpayers in Hawaii County, HI, facing IRS collection, the absence of specific IRS Local Housing and Utilities Standards (listed as $N/A for 1-person through 5+ households) presents a unique situation. In such cases, the IRS may consider actual, reasonable, and necessary housing expenses. For comparison, the U.S. Department of Housing and Urban Development (HUD) Fair Market Rent (FMR) for FY2025 in Hawaii County indicates a 2-bedroom unit averages $2550.0 per month, a 1-bedroom at $1970.0, and a studio at $1960.0. If your actual housing expenses exceed what the IRS might typically allow or if a local standard is not provided, you have a strong basis to request a deviation from the standard. Internal Revenue Manual (IRM) 5.15.1.10 permits IRS Collection personnel to allow actual expenses that are higher than the published standards if justified by the taxpayer as necessary and reasonable. Given that regional shelter Consumer Price Index (CPI) data is not available for this specific region, the HUD FMR data becomes a critical reference point to demonstrate the reality of housing costs in Hawaii County, strengthening an argument for allowing actual, higher expenses.

Beyond housing, the IRS Collection Financial Standards provide specific allowances for other essential living expenses in Hawaii County, HI. For food, clothing, and other necessities, the National Standards, based on the Bureau of Labor Statistics Consumer Expenditure Survey, allocate $812 per month for a single individual, increasing to $1478 for a 2-person household, $1697 for 3 people, and $1983 for a 4-person household, with an additional $357 for each extra person. Out-of-pocket healthcare expenses are also standardized: $75 per month for individuals under 65 and $153 per month for those 65 and over, derived from the Medical Expenditure Panel Survey. For transportation in Hawaii County, the IRS Local Standards, based on BLS data and American Automobile Association operating costs, allow for $588 per month for the ownership of one car, plus an additional $270 for operating costs in this region, totaling $858 per month for one vehicle. For two cars, the ownership allowance doubles to $1176, making the total $1446 per month. These specific allowances are crucial for accurately calculating your ability to pay and determining potential collection alternatives.

For taxpayers in Hawaii County, HI, who demonstrate an inability to pay their tax debt without experiencing economic hardship, Currently Not Collectible (CNC) status offers temporary relief from enforced collection. To qualify, you must submit IRS Form 433-A, Collection Information Statement, detailing your income, assets, and allowable expenses. The IRS will compare your total monthly income against your total allowable monthly expenses using the Collection Financial Standards. For a single filer in Hawaii County, a potential CNC calculation might consider actual housing expenses (e.g., $2550.0 for a 2-bedroom based on HUD FMR, due to the N/A IRS local standard), plus $812 for food/clothing/other, $75 for healthcare (under 65), and $858 for one car's transportation. If your total allowable expenses equal or exceed your income, leaving no disposable income, the IRS may place your account into CNC status. IRM 5.16.1 outlines the procedures for CNC, and IRC §6343 mandates the release of a levy if it creates economic hardship. While in CNC, the IRS will not actively pursue collection, but the 10-year Collection Statute Expiration Date (CSED) under IRC §6502 continues to run, meaning CNC does not extend the time the IRS has to collect your debt.