Gas Is Out Of Control, What Is The IRS Thinking?
By Rachel Lynn Foley, Kansas City, MO, Bankruptcy Attorney on Jun 30, 2008 in Chapter 13 Bankruptcy, Chapter 7 Bankruptcy, General Bankruptcy Information, Kansas, Means Testing, Missouri
Whether you qualify for a Chapter 7 or a Chapter 13 depends in large part to the Means Test. The Means Test uses a standard for the “Operating Cost” of a vehicle as set by the Internal Revenue Service (IRS). The IRS defines Operating Costs as “The operating costs include maintenance, repairs, insurance, fuel, registrations, licenses, inspections, parking and tolls.” As you can see from the definition that the monthly allowance includes not only gas but maintenance and insurance. The average operating cost currently for Kansas City is $183 per month. I don’t know what the cost of gas is where you live but as of today, June 30, 2008 the average tank of gas in Kansas City is $3.94 per gallon. As such the operating cost will allow me to go as far as 46 gallons will take me. So at 18 miles per gallon I am allowed to drive 828 miles a month. Even if you just drive 30 miles each day to work, the average monthly mileage will be 600. This does not include the mileage back and forth to daycare, school, groceries, doctor appointments, etc… So the $183 per month barely covers the gas for a person who is driving a vehicle that gets 18 miles to the gallon and let’s pray that the vehicle is in good condition and does not require any maintenance. Bottom line this is a ridiculous number for today’s economy.
Does this mean that you are out of luck when you are forced to use the IRS numbers? Not necessarily. Under the Means-Test you are allowed to argue exigent circumstances. I certainly think that the $3.94 a gallon is an exigent circumstance that the trustee and Court should pay attention to. What I recommend to all my clients is to keep an envelope in each vehicle. Then every time you stop for gas, oil, maintenance, etc… you place that receipt in the envelope. By doing this you can actually track how much is being spent for your vehicle expense so that you can argue actual numbers to the Court instead of the IRS figures. In my district of the Western part of Missouri and Kansas we have been successful in making this argument but if and only if we have the receipts to back up the numbers.
Remember that you must take an active role in your bankruptcy and in your financial life to achieve the success you desire. In order to do this you MUST understand where every penny is being spent.
Knowledge is power, harness it to regain your financial control today.
Written by Rachel Lynn Foley.
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