Navigating IRS Wage Levy and Hardship in Pueblo, Colorado

When the Internal Revenue Service (IRS) is evaluating a taxpayer's ability to pay back taxes in Pueblo, Colorado, they rely on a detailed financial assessment using Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals. This form helps the IRS determine your disposable income by comparing your gross income against a set of allowable living expenses, known as National and Local Standards. These standards are crucial for taxpayers seeking relief, such as an Offer in Compromise or Currently Not Collectible (CNC) status. For instance, the National Standards for Food and Clothing allow a single person $812 per month, while a family of four can claim $1,983. Although specific IRS Local Housing and Utilities Standards are not provided for Pueblo, CO MSA in the standard tables, taxpayers must document their actual, necessary expenses. These standards are derived from comprehensive data collected by IRS.gov, the Bureau of Labor Statistics (BLS), and the U.S. Census Bureau. Understanding these figures is vital to demonstrate that enforcing collection would create an economic hardship, a condition the IRS considers under IRC §6343(a)(1)(D) for levy release.

While the IRS Collection Financial Standards do not list specific Housing and Utilities allowances for Pueblo, CO MSA, taxpayers are expected to justify their actual, reasonable expenses. For comparison, the U.S. Department of Housing and Urban Development (HUD) sets the Fair Market Rent (FMR) for a 2-bedroom unit in Pueblo, CO MSA at $1,940.0 per month for FY2025. This figure often serves as a practical benchmark for what constitutes a reasonable housing expense in the region, especially when IRS local standards are not explicitly defined. If a taxpayer's actual housing costs, such as the $1,940.0 for a 2-bedroom rental, exceed what the IRS might otherwise typically allow, they can request a deviation from the standard. Internal Revenue Manual (IRM) 5.15.1.10 outlines the procedures for allowing necessary expenses that exceed the established standards. When such justified expenses are significantly higher than general expectations, it strongly supports an argument for economic hardship. Unfortunately, regional Shelter CPI (Consumer Price Index) data for Pueblo, CO MSA is not available to provide a year-over-year comparison for housing cost increases, making the HUD FMR an even more critical reference point.

Beyond housing, the IRS allows for other essential living expenses based on National and Local Standards. For food, clothing, and other necessities, the National Standards provide a monthly allowance of $812 for a single person, escalating to $1,983 for a family of four, with an additional $357 for each extra person. These figures are based on the Bureau of Labor Statistics Consumer Expenditure Survey. Healthcare costs are addressed by National Standards for Out-of-Pocket Healthcare, allowing $75 per month for individuals under 65 and $153 for those 65 and over, per person. For a family of four where all are under 65, this totals $300 monthly (4 × $75). These amounts are derived from the Medical Expenditure Panel Survey. For transportation in Pueblo, CO MSA, the IRS Local Standards provide for both ownership and operating costs. A single vehicle allowance is $588 for ownership and $270 for operating costs within the region, totaling $858 per month. For a two-car household, this increases to $1,176 for ownership and $270 for operating costs, totaling $1,446. These transportation figures are based on BLS data and American Automobile Association operating costs.

For taxpayers in Pueblo, Colorado, facing an inability to pay their tax debt, obtaining Currently Not Collectible (CNC) status can offer temporary relief from IRS enforced collection actions like wage levies (Form 668-W) and bank levies (Form 668-A). To qualify for CNC, you must demonstrate to the IRS that your allowable monthly expenses meet or exceed your monthly income, leaving no disposable income to pay your tax liability. This evaluation begins by submitting a comprehensive Form 433-A, detailing your income, assets, and all allowable living expenses according to IRS Collection Financial Standards. For example, a single filer in Pueblo might calculate their total allowable expenses as follows: a reasonable housing expense, such as the HUD FMR for a 2-bedroom at $1,940.0; National Standard Food, Clothing & Other allowance of $812; National Standard Out-of-Pocket Healthcare of $75 (for under 65); and Local Standard Transportation allowance of $858 (for one car). This totals $3,685 in justifiable monthly expenses. If your net monthly income is less than or equal to this amount, you may qualify for CNC. IRM 5.16.1 outlines the procedures for CNC status, and upon approval, the IRS will typically release any existing levies under IRC §6343. It is crucial to understand that CNC status does not erase the tax debt; it merely postpones collection. The statutory period for collection (CSED) under IRC §6502, which is generally 10 years from the assessment date, continues to run during CNC status, meaning the IRS does not get extra time to collect after the 10-year window.