Tax Pros – Wait to send your next 433-A to the IRS – Collection Financial Standards have been updated for 2023!

Tax Pros – Wait to send your next 433-A to the IRS! The IRS Collection Financial Standards have been updated for 2023!

The IRS changed when they release the updated Collection Financial Standards in 2022 to April.

The have released the new numbers and you may want to take a look at this before you submit your next 433-A. Be sure that you compare this to the numbers on your 433-A to your Tax Resolution software.

Here are some highlights of the new numbers

Food, clothing and miscellaneous – 1 person $841, 2 people $1,389 (2022 numbers were $788 and $1,410)

Health care – $79 under 65; $154 over 65 (2022 was $75 and $150)

Housing – my county of Brevard, FL increased over $200 for 1 person. (I would expect to see this increase in most areas)

Transportation – Ownership 1 car $629, 2 cars $1,258 (2022 $588 (1) car; $1,176 (2) cars)

Operating – NE – $298, MW – $225, SE – $242, W – $264; very minimal to no increase in these numbers.

Again, please be sure to make sure your tax resolution software is up-to-date and recalculate the numbers for cases you have open. You could possibly reduce the available net for them by at least $325 or more just by using the new numbers.

You can find the new numbers with this link or Google “IRS Collection Financial Standards”

If you want to come see our Fast Start Bootcamp at a location near you (yes, we are doing these LIVE and in person). To register, pick the location nearest you with this link

Hope you guys have recovered a little since tax season.

Dan Henn, CPA, CTR™, NTPI Fellow… Continue reading

Tax Professionals be aware of allowances for health care when dealing with IRS collections cases

IRS Collection Financial Standards – National Standards for Out-of-Pocket Health Care

Please note that the IRS Collection Financial Standards are designed for the purpose of calculating repayment of overdue taxes and are effective only for federal tax administration on and after April 25, 2022. For information regarding expenses related to bankruptcy calculations, kindly visit the website of the U.S. Trustee Program.

The allowable out-of-pocket costs for health care for 2023 is $75 for under age 65 and $153 for over age 65.  It is important to note that the standard amounts may change, and thus, it is advisable to check back periodically to ensure that you have the latest version.

The table for health care expenses has been established based on data from the Medical Expenditure Panel Survey and is intended to provide minimum allowances for out-of-pocket health care expenses. These expenses include medical services, prescription drugs, and medical supplies (such as eyeglasses, contact lenses, etc.). This is most items that are bought as part of a prescription from a licensed health care professional. However, elective procedures such as plastic surgery or elective dental work are generally not allowed.

Taxpayers and their dependents are allowed the standard amount monthly on a per-person basis, without being questioned about the amounts they actually spend. In the event that the claimed amount is greater than the total allowed by the health care standards, the taxpayer must provide documentation to substantiate that the expenses are necessary living expenses. Generally, the number of individuals allowed should be the same as the number of dependents claimed on the taxpayer’s most recent year income tax return.

Furthermore, the out-of-pocket health care standard amount is allowed in addition to the amount taxpayers pay for health insurance.… Continue reading

Preparing for 1040 Tax Resolution Season

With the 1040 filing season peak upon you, it’s time to consider how you’re going to continue serving clients and generating revenue into the late spring and summer.
One option, which still presents a growing revenue opportunity for your tax firm, is my good friend tax resolution. While 941 Collections representation isn’t seasonal, the 1040 side most certainly is, and the time to start preparing for that season is right now, not June.
Normally, June is when the IRS starts sending out Collections notices for 1040 returns that were timely filed. Given the current issues at the Service, we may see a delay in the issuance of those notices, but it’s not something that I would bank on. Plus, it’s your business, so run it by your schedule, instead of letting the government dictate the annual pace and progress of business development. Thus, I think it’s best to “act as if” the normal Collections cycle will start on time.
With that in mind, some tips to help you get ready:
  1. If you have little or no experience with IRS Collections and Examination representation, now is a good time to start filling in your skills gap with appropriate CPE. Don’t wait until a representation case lands in your lap, start skilling up now to avoid the mad dash later. If you’re already an experienced representation practitioner, it’s time to get up to speed on any recent changes in IRS policy and procedure on this front.
  2. On the marketing side of the house, start lining up your late spring/early summer public speaking opportunities now at appropriate organizations where people with tax debts are disproportionately present. Delivering Tax Talks to such orgs is, hands down, one of the best ways to get representation clients.
  3. Revisit professional referral partners. During filing season, it’s easy to ignore joint venture and referral partners. Don’t wait until the end of filing season to let other tax professionals, attorneys, financial planners, mortgage loan officers, and the like to know that you are available, ready, and willing to help their clients with tax debt or audit issues.
By doing these most basic things, you’ll be well positioned to seamlessly transition from filing season to resolution season here in a few weeks.
To help you on both the technical side of representation, as well as the marketing and practice management side of the house, I’d encourage you to check out the Tax Resolution Academy.
… Continue reading