Terre Haute, Indiana IRS Wage Levy & Hardship Relief in 2025

When facing IRS collection actions such as a wage levy (Form 668-W) or bank levy (Form 668-A), understanding your allowable living expenses is critical. The IRS uses a detailed financial analysis, typically documented on Form 433-A, 'Collection Information Statement for Wage Earners and Self-Employed Individuals,' to determine your disposable income. This calculation relies on a combination of National and Local Standards, ensuring a fair assessment of your ability to pay. For instance, a single individual in Terre Haute, IN HUD Metro FMR Area is allowed $812 monthly for food, clothing, and other necessities, as per National Standards derived from Bureau of Labor Statistics (BLS) Consumer Expenditure Survey data. While specific IRS Local Housing Standards are not provided for this area, the IRS will evaluate actual, reasonable housing costs. The goal is to determine if enforcing collection would cause an economic hardship, as defined under Internal Revenue Code (IRC) §6343(a)(1)(D). These standards are sourced directly from IRS.gov Collection Financial Standards, which incorporate data from the BLS and US Census Bureau, providing an authoritative basis for your case.

For taxpayers in Terre Haute, IN HUD Metro FMR Area, the IRS Collection Financial Standards do not provide a pre-set Local Housing and Utilities allowance (listed as $N/A for all household sizes). This means the IRS will assess your actual, necessary housing and utility expenses. To substantiate reasonable housing costs, taxpayers can refer to the US Department of Housing & Urban Development (HUD) Fair Market Rent (FMR) data for the Terre Haute, IN HUD Metro FMR Area. For example, the FY2025 HUD FMR for a 2-bedroom residence is $960.0 per month, a 1-bedroom is $750.0, and a 3-bedroom is $1170.0. If your actual housing expenses are higher than what an IRS Revenue Officer initially deems reasonable, you may need to request a deviation from the standard, a process outlined in Internal Revenue Manual (IRM) 5.15.1.10. Presenting HUD FMR data can significantly strengthen your argument that your actual rent is reasonable for the local market. Unfortunately, regional Shelter CPI (Consumer Price Index) data from the Bureau of Labor Statistics for year-over-year changes is not available for this specific region, which otherwise could provide additional context on local housing cost trends.

Beyond housing, the IRS also accounts for essential living expenses through National and Local Standards. For food, clothing, and other necessary items, National Standards dictate allowances ranging from $812 per month for a single person to $1983 for a family of four, with an additional $357 for each additional person, all derived from the Bureau of Labor Statistics Consumer Expenditure Survey. Healthcare is another critical allowance; the IRS permits $75 per person under 65 years old and $153 per person 65 and over monthly, based on data from the Medical Expenditure Panel Survey. Transportation allowances for Terre Haute, IN HUD Metro FMR Area are also specific: a single car ownership allowance is $588 per month, with an additional $270 for operating costs in this region, totaling $858 per month for one vehicle. For households with two vehicles, the ownership allowance rises to $1176, making the combined total $1446 (assuming standard operating costs for two vehicles). These figures are based on Bureau of Labor Statistics data and American Automobile Association operating costs, ensuring a realistic assessment of your transportation needs.

If your allowable living expenses, as determined by IRS Collection Financial Standards, exceed your monthly income, you may qualify for Currently Not Collectible (CNC) status. This temporary hardship designation means the IRS will suspend active collection efforts. To apply, you must submit a completed Form 433-A, 'Collection Information Statement,' detailing your income, expenses, and assets. For a single filer in Terre Haute, Indiana, a typical calculation might include a justifiable housing expense (e.g., using the 2BR HUD FMR of $960.0), plus National Standards for food, clothing, and other items ($812), healthcare ($75 for under 65), and transportation ($858 for one car). This totals $2705.0 in monthly allowable expenses. If your net monthly income is less than this amount, you are a strong candidate for CNC. Internal Revenue Manual (IRM) 5.16.1 outlines the procedures for CNC determinations, and IRC §6343 provides for the release of levies if collection would create economic hardship. It is crucial to understand that CNC status does not forgive the debt; interest and penalties continue to accrue, and the Collection Statute Expiration Date (CSED) under IRC §6502 (generally 10 years from assessment) continues to run, meaning CNC status does not extend the time the IRS has to collect.