The Allowable Living Expense (ALE) standards for 2021, have been updated. Collection Financial Standards are used to help determine a taxpayer’s ability to pay a delinquent tax liability. Allowable living expenses include those expenses that meet the necessary expense test. The necessary expense test is defined as expenses that are necessary to provide for a taxpayer’s (and his or her family’s) health and welfare and/or production of income.
These standards reduce subjectivity when determining what a taxpayer may claim as basic living expenses to avoid undue hardship when the taxpayer must delay full payment of a delinquent tax. The standard allowances provide consistency and fairness in collection determinations by incorporating average expenditures for necessities for citizens in similar geographic areas.
Additional information and the standard amounts are available on the IRS National Standards for Food, Clothing and Other Items web page. Expense information for use in bankruptcy calculations can be found on the website for the U.S. Trustee Program.
For more information about the IRS’s Collection program, see Publication 594, The IRS Collection Process, Publication 594, The IRS Collection Process. For general payment options, see IRS Paying Your Taxes page or our Paying Taxes Get Help pages.