IRS Collection - Living Expenses

[Gretel]

Does anyone has experience with this?

IRS allows payments to tax professionals as necessary living expenses. I was surprised to learn today that they allow only payments to resolve IRS issues, not issues with the state. I don't quite believe this.

[taxea]

What is your source that says state portion of fee must be allocated out?
I have a client that pays both est tax to fed and state and fed is accepting the amounts as necessary living expenses. Don't know why oic would be any different.

[New York Enrolled Agent]

Does anyone has experience with this?

IRS allows payments to tax professionals as necessary living expenses. I was surprised to learn today that they allow only payments to resolve IRS issues, not issues with the state. I don't quite believe this.

Try IRM 5.15.1.10

[New York Enrolled Agent]

Don't know why oic would be any different.

Try IRM 5.8.5.6.4

[Gretel]

Thank you, both.

I certainly did not give enough details. My clients owes almost $60,000 including penalties and interest, can only pay only $50/month now and starting next year $200/month. Therefor only necessary expenses are allowed.

I checked on the referenced sections in the manual before. Section below explicitly says it's for representation before the Service. When the agent put the screws on me when I think my clients has paid me off I was stupid enough to mention the state issue, which I haven't touched yet.

Since this is my first experience with collections I would like to get some guidance and have two more questions right now.

1. Has the IRS the right to take the max. amount the T/P is deemed to be able to pay and then the state gets nothing?

2. My T/P might be able to get a mortgage of $25,000 against his mobile home and I consider OIC. Do you think IRS is likely to accept? What is the procedure to move from an installment agreement to OIC? Anyway, is that a good idea?

Thank you.

5.15.1.10 - If representation before the Service is needed or meets the necessary expense test. Amount must be reasonable.