- 17 -
Those procedures contain guidelines for allowable expenses, which
include necessary and conditional expenses. See id. (citing IRM
(CCH), sec. 5.15.1 to 5.15.1.4, at 17,653-17,660). “Necessary”
expenses are those that provide for a taxpayer’s health and
welfare and/or the production of income. See IRM sec. 5.15.1.3(2)
(2000). Under IRM sec. 5.15.1.3(4) (2000), the Appeals officer is
permitted to allow “excessive necessary” and “conditional”
expenses when examining a taxpayer’s financial statement, provided
that the tax liability, including all accruals, will be paid
within 5 years. “Conditional” expenses are any expenses other
than “necessary” expenses. See IRM secs. 5.15.1.7(6) (2004) and
5.15.1.3(3) (2000). Further, all expenses must be substantiated
in order to be allowable. See Schulman v. Commissioner, supra
(sustaining the Appeals officer’s disallowance of unsubstantiated
expenses).
Sections 301.6320-1(e) and 301.6330-1(e), Proced. & Admin.
Regs., provide that the taxpayers are obligated to provide all
requested information, including financial statements, throughout
the course of the hearing. In addition, IRM sec. 5.15.1.1(8)
(2004) states that financial statements submitted by taxpayers in
the course of a hearing should be updated if they are older than
12 months. This Court has previously upheld the Commissioner’s
determination that a proposed installment agreement was
unacceptable on account of the taxpayer’s failure to provide
Page: Previous 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 NextLast modified: May 25, 2011