The IRS released in April 2023 the most recent version of the Form 656-B, Offer in Compromise Booklet. Tax professionals should always download and use the most current version of this form to avoid processing delays. The booklet also includes the forms taxpayers must complete as part of the OIC process and is now available in Spanish. Offers in compromise let taxpayers settle their tax debts for less than the full amount they owe once they’ve exhausted all other payment options. The IRS will consider each taxpayer’s unique set of facts and circumstances before accepting an OIC.

Share this IRS Tax Tip with clients that explains the OIC process in detail including how to:

Avoid paying an OIC application fee if a taxpayer qualifies as low-income (as defined by Form 656).
Confirm if a taxpayer is eligible to file an OIC and calculate a preliminary offer amount using the OIC Pre-Qualifier Tool.
File an offer and what information to gather for completing the various forms by watching a how-to OIC video playlist series that’s now also available in Spanish and Simplified Chinese.

If you have questions, please reach out to us!

 … Continue reading

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