Navigating IRS Wage Levy and Hardship in Henry County, Alabama

When facing IRS collection actions, taxpayers in Henry County, AL, must understand how the IRS determines their ability to pay. This assessment is primarily conducted using Form 433-A, 'Collection Information Statement for Wage Earners and Self-Employed Individuals.' The IRS calculates your disposable income by comparing your gross monthly income against a set of National and Local Collection Financial Standards. These standards cover essential living expenses, ensuring that taxpayers retain enough funds for basic necessities. For instance, the National Standards allow a single individual $812 per month for food, clothing, and other necessities, based on Bureau of Labor Statistics data. While specific IRS Local Housing Standards are not published for Henry County, AL, taxpayers are permitted to claim their actual housing and utility expenses, subject to reasonableness. If your allowable expenses exceed your income, you may qualify for economic hardship, as defined under IRC §6343(a)(1)(D), potentially leading to a levy release or Currently Not Collectible status. These crucial figures are derived from authoritative sources like IRS.gov, the US Census Bureau, and the Bureau of Labor Statistics.

For taxpayers in Henry County, AL, specific IRS Local Housing & Utilities Standards are listed as $N/A, meaning the IRS does not provide a pre-set allowance. Instead, the IRS considers your actual, reasonable housing and utility expenses. This is where the US Department of Housing & Urban Development (HUD) Fair Market Rent (FMR) data becomes a critical benchmark. For example, the HUD FMR for a 2-bedroom residence in the Henry County, AL HUD Metro FMR Area is $780.0 per month. If your actual rent exceeds this, you can still claim it, but the IRS may scrutinize its reasonableness. Under IRM 5.15.1.10, 'Deviation from National and Local Standards,' taxpayers can request to exceed the standard amounts if their expenses are necessary and reasonable. Demonstrating that your actual rent aligns with or is less than the HUD FMR for a comparable dwelling, such as $780.0 for a 2-bedroom unit, strengthens your case. Unfortunately, regional Shelter CPI data is not available for this specific region, which could otherwise provide additional context for housing cost trends.

Beyond housing, the IRS provides allowances for other critical living expenses. For food, clothing, and other necessities, the National Standards, based on the Bureau of Labor Statistics Consumer Expenditure Survey, provide a monthly allowance of $812 for a single person, rising to $1478 for a two-person household, $1697 for three, and $1983 for a four-person family. Each additional person adds $357. Healthcare is another crucial category, with the IRS allowing $75 per person monthly for those under 65 and $153 for those 65 and over, derived from the Medical Expenditure Panel Survey. For transportation in Henry County, AL, the IRS Local Standards (based on BLS data and AAA operating costs) allow $588 per month for one car ownership and $270 for operating costs in this region, totaling $858. For two cars, the ownership allowance is $1176, making the total $1446. These allowances are vital for calculating your ability to pay and determining potential hardship.

Achieving Currently Not Collectible (CNC) status is a critical relief option for taxpayers in Henry County, AL, facing severe financial hardship. To qualify, you must demonstrate to the IRS that, after accounting for your necessary living expenses, you have no disposable income to make payments on your tax debt. This process begins by submitting a comprehensive Form 433-A, detailing your income, assets, and all allowable expenses. For a single filer in Henry County, AL, a calculation might include a housing expense of $780.0 (based on 2BR HUD FMR, as actuals are allowed), a National Standard food/clothing allowance of $812, a healthcare allowance of $75 (under 65), and a transportation allowance of $858 (for one car). If the sum of these expenses ($780.0 + $812 + $75 + $858 = $2525.0) exceeds your net monthly income, the IRS may place your account in CNC status. As outlined in IRM 5.16.1, 'Currently Not Collectible,' this status temporarily suspends collection activities, including the release of levies under IRC §6343. Importantly, CNC status does not extend the Collection Statute Expiration Date (CSED) under IRC §6502, which generally limits the IRS to 10 years to collect a tax debt from the date of assessment.