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Sioux Falls, South Dakota IRS Wage Levy & Hardship Assistance

Last updated: May 29, 2026 · Sources: IRS.gov, HUD.gov, BLS.gov

Understanding IRS Collection Standards in Sioux Falls, SD

For taxpayers in the Sioux Falls, SD HUD Metro FMR Area facing IRS enforced collection, understanding the IRS Collection Financial Standards is paramount. These standards, published on IRS.gov, dictate the allowable monthly living expenses the IRS uses to calculate a taxpayer's ability to pay, often documented on Form 433-A, Collection Information Statement. The IRS uses a combination of National and Local Standards, derived from data by the Bureau of Labor Statistics (BLS) and the US Census Bureau American Community Survey. For instance, a single individual in Sioux Falls is allocated $812 per month for Food, Clothing, and Other necessary expenses. These standards are critical in determining whether a taxpayer qualifies for an Offer in Compromise, an Installment Agreement, or Currently Not Collectible (CNC) hardship status under IRC §6343(a)(1)(D), which allows for the release of a levy if it creates economic hardship.

Sioux Falls Housing & Utilities Allowance vs. HUD Fair Market Rent

The IRS Collection Financial Standards for Housing and Utilities for the Sioux Falls, SD HUD Metro FMR Area are currently listed as $N/A for all household sizes, from 1-person to 5+ persons. This means the IRS typically uses actual housing expenses, up to a reasonable limit, when evaluating a taxpayer's financial situation. However, it's crucial to compare this against the Department of Housing and Urban Development (HUD) Fair Market Rent (FMR) data for the area. For example, the HUD FY2025 FMR for a 2-bedroom unit in Sioux Falls, SD is $980.0 per month. If a taxpayer's actual housing expenses exceed what the IRS might deem reasonable, they may need to request a deviation from the standard, as outlined in Internal Revenue Manual (IRM) 5.15.1.10. Documenting that your actual rent aligns with or is below the HUD FMR, especially when the IRS standard is $N/A, significantly strengthens your argument for allowance. Unfortunately, regional shelter CPI data from the Bureau of Labor Statistics is not available for this specific region, which could otherwise provide additional context on housing cost inflation.

Food, Healthcare & Transportation Allowances

Beyond housing, the IRS provides allowances for other essential living expenses. The National Standards for Food, Clothing & Other, based on the BLS Consumer Expenditure Survey, allocate $812 per month for a single person, increasing to $1983 for a four-person household. This covers necessities like food ($449), housekeeping supplies ($44), apparel and services ($99), personal care products ($45), and miscellaneous expenses ($175) for a single individual. For healthcare, the IRS National Standards, derived from the Medical Expenditure Panel Survey, allow $75 per person per month for those under 65 and $153 for those 65 and over. Transportation allowances for the Sioux Falls region are also significant: $588 per month for owning one car and $270 for operating costs, totaling $858 per month for a single vehicle. These figures, based on BLS data and American Automobile Association (AAA) operating costs, are vital for taxpayers to accurately complete their Form 433-A and demonstrate their true ability to pay.

Qualifying for Currently Not Collectible (CNC) Status in South Dakota

For taxpayers in South Dakota facing severe financial hardship, Currently Not Collectible (CNC) status offers a temporary reprieve from active IRS collection efforts. To qualify, you must demonstrate to the IRS that after accounting for all necessary living expenses based on the IRS Collection Financial Standards, you have no disposable income to pay your tax debt. This process typically begins by filing Form 433-A, Collection Information Statement, detailing your income, assets, and allowable expenses. For a single filer in Sioux Falls, SD, for example, their total allowable expenses could include: $980.0 for housing (using the 2-bedroom HUD FMR as a reasonable proxy), $812 for Food, Clothing & Other, $75 for out-of-pocket healthcare, and $858 for transportation, totaling $2725.0 per month in standard expenses. If your net income is less than or equal to this amount, you may qualify for CNC. IRM 5.16.1 outlines the procedures for CNC determinations, and qualifying can lead to the release of an existing levy under IRC §6343. Importantly, while CNC status pauses collection, it does not stop the 10-year Collection Statute Expiration Date (CSED) under IRC §6502 from running, meaning the IRS's time to collect continues to tick down.

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Frequently Asked Questions

For 2025, the IRS Collection Financial Standards list the housing and utilities allowance for the Sioux Falls, SD HUD Metro FMR Area as $N/A for all household sizes. This means the IRS will generally consider your actual, reasonable housing expenses. For context, the HUD FY2025 Fair Market Rent for a 2-bedroom unit in this area is $980.0 per month. If your actual housing costs are in line with or below the HUD FMR, you should document this on Form 433-A. If your expenses exceed this, you may need to request a deviation from the standard, providing supporting documentation as per IRM 5.15.1.10, demonstrating that your costs are necessary and reasonable given your specific circumstances in South Dakota.
To qualify for Currently Not Collectible (CNC) status in South Dakota, you must prove to the IRS that you lack the financial ability to pay your tax debt due to economic hardship. This involves completing and submitting Form 433-A, Collection Information Statement, which details your income, assets, and monthly necessary living expenses. The IRS will compare your income against their National and Local Collection Financial Standards. For example, a single person's monthly allowable expenses could be around $2725.0, combining $980.0 for housing (based on HUD FMR), $812 for Food, Clothing & Other, $75 for healthcare, and $858 for transportation. If your disposable income after these essential expenses is zero or negative, the IRS may place your account in CNC status, as outlined in IRM 5.16.1. This temporarily halts active collection efforts, and under IRC §6343, existing levies may be released.
When the IRS issues a wage levy (Form 668-W) in Sioux Falls, SD, the amount they can seize from your paycheck is determined by specific federal exemption amounts. According to IRS Publication 1494 for 2025, a single taxpayer with zero dependents has a monthly levy exemption of $1096.67. If that single taxpayer claims one dependent, the exemption increases to $1680.0 per month. For a married individual filing jointly with zero dependents, the exemption is also $1096.67, but with one dependent, it rises to $2286.67. The IRS can levy the portion of your net disposable earnings that exceeds these exempt amounts. South Dakota generally follows federal Consumer Credit Protection Act (CCPA) limits, which typically restrict garnishment to 25% of disposable earnings or the amount by which disposable earnings exceed 30 times the federal minimum wage, whichever is less. However, IRS levies often take precedence over state limits.
Since the IRS Collection Financial Standards for Housing and Utilities are listed as $N/A for Sioux Falls, SD, the IRS will evaluate your actual housing expenses for reasonableness. If your rent exceeds what the IRS typically allows or the HUD FY2025 Fair Market Rent for a 2-bedroom unit ($980.0), you have the option to request a deviation from the standard. As per IRM 5.15.1.10, you must provide clear documentation and a compelling explanation demonstrating that your higher housing costs are necessary and reasonable for your specific circumstances and location within the Sioux Falls, SD HUD Metro FMR Area. This could include showing that your rent is consistent with similar properties in your neighborhood or that you have unique housing needs that justify the expense. Strong documentation is key to getting these higher expenses approved and accurately reflecting your true ability to pay.
The IRS generally has 10 years to collect a tax debt from the date the tax was assessed. This period is known as the Collection Statute Expiration Date (CSED), as outlined in Internal Revenue Code (IRC) §6502. It is a critical legal deadline for both taxpayers and the IRS. While collection actions like wage levies (Form 668-W) or bank levies (Form 668-A) can be aggressive, the CSED limits the IRS's enforcement power. Certain events can pause or extend this 10-year period, such as filing for bankruptcy, submitting an Offer in Compromise (Form 656), or requesting a Collection Due Process (CDP) hearing. However, placing an account in Currently Not Collectible (CNC) status, while providing temporary relief from collection, generally does not extend the CSED, allowing the clock to continue running down the 10-year collection window.

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