Montgomery County, Kentucky IRS Wage Levy & Hardship Assistance

When the IRS assesses your ability to pay a tax debt, particularly in situations involving a proposed wage levy (Form 668-W) or bank levy (Form 668-A), they utilize a structured approach based on your financial capacity. This assessment begins with the submission of IRS Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals. The IRS calculates your disposable income by subtracting allowable living expenses, derived from both National and Local Standards, from your gross monthly income. For instance, the National Standards for Food, Clothing, and Other necessities allow a single person in Montgomery County, KY, $812 per month, while a family of four is allotted $1983. These standards are crucial for determining if an economic hardship exists, as defined under Internal Revenue Code (IRC) §6343(a)(1)(D), which can prevent or release a levy. This data is rigorously compiled from official sources including IRS.gov Collection Financial Standards, Bureau of Labor Statistics (BLS) Consumer Expenditure Survey, and US Census Bureau American Community Survey data.

In Montgomery County, Kentucky, the IRS Collection Financial Standards for Housing and Utilities are currently listed as 'N/A' for all household sizes. This 'N/A' status means the IRS will generally allow taxpayers their actual housing and utility expenses, provided they are reasonable and necessary. However, taxpayers should be prepared to justify these expenses. For comparison, the Department of Housing and Urban Development (HUD) Fair Market Rent (FMR) for FY2025 in Montgomery County indicates a 2-bedroom unit at $900.0 per month, a 1-bedroom at $690.0, and a 4-bedroom at $1290.0. If your actual housing costs exceed the HUD FMR, or if there were a specific IRS Local Standard, you would need to request a deviation under Internal Revenue Manual (IRM) 5.15.1.10. This process requires clear documentation demonstrating why your expenses are necessary and cannot be reduced. While regional shelter CPI data is not available for this specific region, the HUD FMR provides a strong benchmark for what is considered a reasonable housing cost in Montgomery County, KY.

The IRS National Standards provide specific allowances for essential living expenses. For food, clothing, and other necessities, a single individual in Montgomery County, KY, is allowed $812 per month, which includes $449 for food, $44 for housekeeping supplies, $99 for apparel and services, $45 for personal care products, and $175 for miscellaneous items. A two-person household is allowed $1478, increasing to $1697 for three people, and $1983 for a four-person household, with an additional $357 for each subsequent person. These figures are derived from the Bureau of Labor Statistics Consumer Expenditure Survey. For healthcare, the National Standards allow $75 per person per month for those under 65, and $153 per person per month for those 65 and over. Thus, a family of four, all under 65, would be allowed $300 monthly for out-of-pocket healthcare expenses, based on the Medical Expenditure Panel Survey. Transportation allowances for Montgomery County, KY, are also specific: $588 per month for the ownership costs of one car and $270 per month for operating costs, totaling $858. For two cars, ownership costs are $1176, making the total $1446 (ownership + operating costs for region), based on BLS data and American Automobile Association operating costs.

Achieving Currently Not Collectible (CNC) status in Kentucky is a critical relief option for taxpayers facing severe financial hardship. To qualify, you must demonstrate to the IRS that your allowable monthly living expenses equal or exceed your monthly income, leaving no funds available for tax debt payments. This is primarily determined through the detailed financial analysis presented on IRS Form 433-A. For example, a single filer in Montgomery County, KY, might calculate their total allowable expenses as follows: $690.0 for a 1-bedroom apartment (based on HUD FMR), $812 for food and other necessities, $75 for healthcare, and $858 for transportation, totaling $2435.0. If their net monthly income is less than or equal to this amount, they may qualify for CNC. Under IRM 5.16.1, the IRS will place your account in CNC status, and under IRC §6343, they will release any active levies, such as a wage levy (Form 668-W) or bank levy (Form 668-A). It is important to remember that CNC status does not forgive the tax debt; rather, it temporarily pauses collection efforts. The Collection Statute Expiration Date (CSED), typically 10 years from the assessment date under IRC §6502, continues to run during CNC status, meaning the debt does not extend indefinitely.