IRS Collection Financial Standards

Posted: 19 Dec 2007 Last revised: 28 Dec 2007

See all articles by Carlton M. Smith

Carlton M. Smith

Yeshiva University - Benjamin N. Cardozo School of Law; New York University School of Law


Bowing to repeated pressure from the National Taxpayer Advocate and a critical letter from the author, the IRS made major changes, effective October 1, 2007, to its tables of allowable expenses for collection determinations. The changes to the collection financial standards primarily benefit the poor and lower-middle class and were made in the interests of equity, simplification, and reduced substantiation. The most significant changes included making allowances for food and clothing expenses uniform over all income classes, allowing floor per-person health care expenses and per-household public transportation expenses without substantiation, and adding cellphone expenses to the list of allowable utility expenses.

This article gives historical background about the standards, discusses the major criticisms previously leveled at the standards, and shows how the new standards address many of those criticisms. The author praises the changes made, but concludes that the standards still need further modification to account for higher food and clothing expenditures incurred in urban and rural areas, adequately provide for actual medical expenses, and allow for Internet access and cable television expenses.

Suggested Citation

Smith, Carlton M., IRS Collection Financial Standards. Tax Notes, Vol. 117, No. 9, November 26, 2007, Available at SSRN:

Carlton M. Smith (Contact Author)

Yeshiva University - Benjamin N. Cardozo School of Law ( email )

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New York University School of Law

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