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legalgems
legalgems, Lawyer
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I am considering filing an offer in compromise with the IRS.

Customer Question

I am considering filing an offer in compromise with the IRS. My question is in reference to how they accept the housing and utilities expense.
From the IRS website:
Housing and utilities standards include mortgage or rent, property taxes, interest, insurance, maintenance, repairs, gas, electric, water, heating oil, garbage collection, residential telephone service, cell phone service, cable television, and Internet service.
The taxpayer is allowed the standard amount, or the amount actually spent on housing and utilities, whichever is less. If the amount claimed is more than the total allowed by the housing and utilities standards, the taxpayer must provide documentation to substantiate those expenses are necessary living expenses.
I have 2 questions:
1. Does the IRS in fact let you deduct cable tv, internet, and cell phone expenses?
2. It states that if your claiming more than the standard amount you have to supply documentation (bills, rent receipts, etc.) If you are claiming less than the standard amount do you still have to show the documentation?
Submitted: 9 months ago.
Category: Legal
Expert:  legalgems replied 9 months ago.

The application specifically states:

" rent or mortgage payment and average monthly cost of property taxes, home insurance, maintenance, dues, fees and utilities including electricity, gas, other fuels, trash collection, water, cable television and internet, telephone, and cell phone " so such expenses are included.

Expert:  legalgems replied 9 months ago.

Since one can claim the standard amount even if the cost is not actually incurred, one need not provide documentation because they would receive that credit anyways. That pertains to the following expenses:

Food, clothing, and miscellaneous (e.g., housekeeping supplies, personal care products , minimum payment on credit card). A reasonable estimate of these expenses may be used.

and

Out-of-pocket health care costs (e.g. average monthly cost of prescription drugs, medical services, and medical supplies like eyeglasses, hearing aids, etc.)

application here:

https://www.irs.gov/pub/irs-pdf/f656b.pdf

prequalifier test here:

http://irs.treasury.gov/oic_pre_qualifier/

For other expenses, the IRS may request substantiation.

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Information provided is for educational purposes only. Consultation with a personal attorney is always recommended so your particular facts may be considered. Thank you and take care.

Expert:  legalgems replied 9 months ago.

I hope the above information was useful and the IRS accepts the offer in compromise.

I came across some research for another customer and thought it would be of interest. It deals with the statute of limitations re: IRS collections and how the offer in compromise affects it:

https://www.irs.gov/irm/part5/irm_05-001-019.html

Thank you -

Kindly rate positively if no further questions.

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