Tax Resolution Hot Sheet™ #2: FY20 Data Book; Interest Calculations on BK SFRs; Priorities

In this issue:

  • Fiscal Year 2020 Data Finally Released… Data Time!
  • IRM Update on Interest Calculations on Manually Prepared Returns in BK Cases
  • Are you doing the right work?

Fiscal Year 2020 Data Book
Last week, the IRS finally released the FY20 Data Book. This is my most favorite IRS statistical release of the year, as it includes all the juicy Collections activity details for the year.

As was expected, the shutdown of Collection activity from April 1, 2020 through September 30, 2020 resulted in significant changes to Collection and Examination activities at the Service. The number I was most looking forward to seeing was the change in NFTL filings. All last year, I was guesstimating that we’d see around 250,000 NFTL filings for fiscal year. I wasn’t actually that far off, but the Service beat my prediction with 291,000 NFTs filed.

Other interesting tidbits:

  • Case inventory dropped like a rock, as expected, with only 8.4 million Collection cases in inventory by the end of the fiscal year. This is getting balanced out by the massive increase in enforcement action going on right now, though, so don’t assume that tax resolution is dead — far from it!
  • Levy action dropped by almost half compared to 2019.
  • Delinquent return investigations increased by over 26% — this clearly shows the importance of this activity to the Service (in case you didn’t know it already).
  • OIC acceptance dropped to 31%, with only 0.19% of all Collections cases being resolved via OIC. Not 19%… 0.19%. This is something I continuously stress to tax pros.

From the Exam side, Dan shares:

  • Examinations were cut almost in half compared to three years ago.
  • 80% of audits are still being conducted by correspondence.
  • 90% of all Examinations are against individuals — despite more than half of Collection cases being against businesses. Quite the imbalance in The Force.

Interest Calculations on Manual Returns
IRS released an update to internal procedures on June 14, 2021 under IRM 5.9.13 pertaining to Service preparation of tax returns while a taxpayer is in bankruptcy.

Letter 1714 is a notice sent to the taxpayer that requests unfiled returns. This IRM procedure dictates the procedures for IRS employees to follow when following up on this request for returns and return information. This can include updating taxpayer records with explanations about why filing wasn’t required, reaching out to the taxpayer or their bankruptcy attorney by phone in an … Continue reading

IRS delaying certain TFRP assessments

The IRS has issued interim guidance that delays certain Trust Fund Recovery Penalty assessments until after January 3, 2022.

This interim guidance, issued April 27th, pertains to trust fund taxes for the following periods:

  • Form 941 for Q2, Q3, Q4 2020
  • Form 943 for 2020
  • Form 944 for 2020
  • Form CT-1 for 2020

If an employer elected to defer withholding of the employee portion of Social Security as was permitted under the CARES Act and Presidential Memorandum last year, Revenue Officers cannot pursue TFRP assessment against responsible and willful parties until after that Jan. 3, 2022 date.

The full memo is SBSE-05-0421-0021.

If you represent clients with trust fund issues, you might be interested in the TFRP-related representation courses within our CTR™ curriculum, which include:

  • CTR-201: Intro to 941 Resolution
  • CTR-202: Business Financial Analysis
  • CTR-203: 941 Resolution Options
  • CTR-211: TFRP Investigations
  • CTR-212: TFRP Assessments: Responsible & Willfull
  • CTR-214: Trust Fund Recovery Penalty Appeals (coming soon)

These classes are all 2 CPE hours, and are included with your Tax Resolution Academy® Champions membership.… Continue reading

IRS updates Collection Financial Standards for 2021

Yesterday, the IRS updated the Collection Financial Standards that define allowable living expenses for individual tax debt cases.

You can find the updated standards here.

To prepare you to apply this update, Dan will be presenting an updated version of CTR-111: IRS Collection Financial Standards & Form 433-A next week, on May 5.

Course objectives for this 2-hour CPE class are to:

  • Understand the purpose and application of IRS Collection Financial Standards
  • Explain each individual expense category and how to apply them.
  • Understand the purpose of IRS Form 433-A & 433-F.
  • Complete the Form 433 Income & Expense Table (IET).

Financial analysis is one of the two critical first steps you need to take with every Collections case, so it’s something you need to stay up to date on. For complete details and registration, visit:

Academy Members: Attend via the link on the Events calendar.… Continue reading