One of my favorite IRS revenue officer sayings is that “the IRS is not a bank.” I find this slightly humorous in light of how many people have outstanding tax liabilities, but it also is a key takeaway about the mindset in which revenue officers approach their cases. IRS revenue officers are tasked with achieving the best possible resolution for the government, which means having the taxpayer satisfy their liability as soon as possible and/or squeezing as much money out of the taxpayer over the long run as they can without putting the taxpayer in financial hardship. Do not think for a second that they are going to sway from this purpose. In addition, revenue officers have a manager look over and approve all resolutions before they become final. If they slack in their job, they will hear about it from their managers.
The IRS has what they call “allowable living expenses”. This is the standard of living that the IRS considers appropriate and fair for everyone to meet basic quality of life. Expenses that fall outside this standard, unless justified as necessary during the course of an investigation, are considered a luxury by the IRS. Vacations, gym memberships, investment properties, dining out expenses, and many other expenses that we may consider normal are not considered above the IRS’s priority as a creditor. This is a very hard fact for many taxpayers to come to terms with.
For example, one of the most important and difficult questions that I get from families with IRS problems is whether or not they are going to be able to keep their kids in their private schools or pay their college tuition on an IRS payment plan. This is a difficult thing to hear, but the short answer is that the IRS does not consider these things to be necessary expenses. Much of the time they will give you a time period (approximately a year) to rid yourself of these expenses, but most IRS revenue officers are not going to budge from their position on these issue. There are ways around this (usually people need professional help to get here), but IRS tax resolution sometimes involves difficult choices on the part of the taxpayer.
The main thing that I want to communicate to you is that you need to manage your expectations going into the process of what the end result is going to be. Anything over what is absolutely necessary for you and your family to survive (based on these IRS standards), your revenue officer is going to want. That said, tax resolution is a negotiation and a qualified representative can help guide you through some of these tougher issues (and give you a fair opinion of your chances for getting exactly what you want). However, for those handling their IRS revenue officer matters alone, I would advise them just to be prepared to make some tough sacrifices in order to satisfy the IRS.
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 For more information about allowable living expenses, please see my article on them found here.
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Last updated: May 27, 2023
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