IRS Wage Levy & Hardship Relief in Prescott Valley-Prescott, Arizona

When facing IRS enforced collection actions in Prescott Valley-Prescott, Arizona, understanding the IRS Collection Financial Standards is crucial for establishing your ability to pay. The IRS uses Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, to calculate your disposable income by comparing your gross income against allowable living expenses. These expenses are determined by National and Local Standards, which are derived from reliable data sources such as IRS.gov, the Bureau of Labor Statistics (BLS), and US Census Bureau data. For a single individual in Prescott Valley-Prescott, the monthly National Standard for Food, Clothing & Other is $812. While specific IRS Local Standards for Housing & Utilities are listed as 'N/A' for this area, the IRS will evaluate your actual, necessary housing expenses. If your income falls below these essential living costs, you may qualify for a levy release or currently not collectible (CNC) status, demonstrating economic hardship under IRC §6343(a)(1)(D).

For taxpayers in Prescott Valley-Prescott, AZ MSA, it is important to note that the IRS Collection Financial Standards currently list the Housing & Utilities allowance as 'N/A'. In such cases, the IRS typically evaluates actual, reasonable housing costs. The U.S. Department of Housing & Urban Development (HUD) Fair Market Rent (FMR) data for FY2025 provides a strong benchmark for what is considered reasonable for this area. For example, the FMR for a 2-bedroom unit in Prescott Valley-Prescott, AZ MSA is $1490.0 per month, while a 1-bedroom is $1250.0 and a studio is $1120.0. If your actual housing expenses exceed what the IRS might otherwise deem acceptable, or if you need to establish a reasonable expense where no specific IRS standard exists, you can formally request a deviation from the standard, as outlined in Internal Revenue Manual (IRM) 5.15.1.10. This is especially relevant when your rent aligns with HUD FMRs. Unfortunately, specific Regional Shelter CPI data for this region is not available from the Bureau of Labor Statistics.

Beyond housing, the IRS allows for other essential living expenses based on National and Local Standards. For food, clothing, and miscellaneous items, the National Standards, based on the Bureau of Labor Statistics Consumer Expenditure Survey, provide specific monthly allowances: a 1-person household is allowed $812, a 2-person household $1478, a 3-person household $1697, and a 4-person household $1983. For healthcare, the IRS Collection Financial Standards, derived from the Medical Expenditure Panel Survey, allow $75 per person per month for individuals under 65 and $153 per person per month for those 65 and over. For transportation in Prescott Valley-Prescott, AZ MSA, the IRS Local Standards, based on BLS data and American Automobile Association operating costs, allow for $588 for the ownership of one car and an additional $270 for operating costs, totaling $858 per month for one vehicle. For two vehicles, the total allowance is $1446 per month.

For taxpayers in Prescott Valley-Prescott, Arizona, who demonstrate an inability to pay their tax debt, the IRS may place their account into Currently Not Collectible (CNC) status. To qualify, you must submit a detailed financial statement, typically Form 433-A, to the IRS, allowing them to compare your total monthly income against your total allowable living expenses. For example, a single filer in Prescott Valley-Prescott, AZ MSA might have allowable expenses including $1250.0 for a 1-bedroom (based on HUD FMR), $812 for food, $75 for healthcare (under 65), and $858 for transportation, totaling $2995.0. If your net monthly income is less than this amount, you may qualify for CNC. The IRS outlines procedures for CNC in IRM 5.16.1, and this status can lead to the release of an existing levy under IRC §6343. It is important to remember that while CNC status halts active collection efforts, it does not stop the accrual of penalties and interest, nor does it extend the Collection Statute Expiration Date (CSED), which is generally 10 years from the date of assessment under IRC §6502.