What are the Michigan Department of Treasury Financial Standards, how are they used for an offer in compromise and where can they be found?

The Department of Treasury’s Financial Standards are used to determine a debtor’s ability to pay when requesting an offer in compromise or installment agreement that requires proof of financial hardship. Allowable living expenses include only expenses that are considered necessary expenses. Necessary expenses, as defined by the Internal Revenue Service (IRS), are expenses that are necessary to provide for a debtor’s (and his or her family’s) health and welfare and/or production of income.

Treasury adheres to Financial Standards similar to the Financial Standards published by the IRS for housing and utilities; transportation; medical costs; and food, clothing, and other items when possible.

Generally, the total number of persons allowed for necessary living expenses should be the same as those allowed as exemptions on the debtor’s most recent year income tax return. Michigan Department of Treasury Financial Standards.