In this issue:
- Three procedural deviations on levy action in relation to ACTC, Recovery Rebates, and RRF Payments
- Are you meeting the needs of your clients?
A Trio of Procedural Deviations in Relation to Certain Levies
Two IRM procedural deviations were issued on July 13, 2021, to join one that was issued March 18, 2021, in relation to levy action taken against tax debtors that receive certain federal payments. These are of no surprise to any tax pro, of course, but it’s nice to see the Service still paying attention to such small details that can directly impact the lives of millions of Americans.
These SB/SE Collection memos can be found here:
- Recovery Rebate Levy Deviation
- Advance Child Tax Credit Levy Deviation
- Restaurant Revitalization Fund Levy Deviation
Each memo says more or less the same thing, just in relation to a different source of funds. In short, the procedural deviations stipulate that the IRS must release levies that attach to any account containing funds from one of the three sources. Also, IRS personnel should not issue levies against bank accounts that are known to contain such funds.
If a Collection employee believes that such an account should still be levied, each memo specifies that such levies must be run up the flagpole to either an Area Director or Campus Director before commencing with levy action or refusing to release such a levy.
For 1040 tax debtors with children in particular, this can, for all intents and purposes, provide a get out of levy free card. Since levies should not be issued on accounts to which Advance Child Tax Credit funds are deposited until the conclusion of such monthly payments in December 2021, a shrewd taxpayer representative can effectively “shield” one client bank account from levy action through the end of the year. If your client is eligible for ACTC payments, but is foregoing them to avoid having to deal with potential issues in 2022, it might be worth rethinking that.
Protecting clients from levy action is one of the biggest benefits that a tax pro can bring to a tax debtor, and this can now provide a short-term avenue for doing so, thus giving you time to correct the other underlying issues that got the taxpayer in trouble in the first place.
Are you meeting the needs of your clients?
A few days ago, Charles Schwab’s Advisor Services division released their annual benchmarking study for the RIAs that they service. I realize that very few tax pros reading this are also RIAs, but benchmarking studies from parallel service industries are worth reading — you’ll learn a lot.
What really caught my eye, however, was this chart showing that financial planning firms are increasingly offering other services to their clients. In fact, they’re even stepping on YOUR toes:
Yeah, that’s right. These affluent families are NOT utilizing the services of their tax professional for tax planning. Instead, they’re using their investment advisor.
Sure, Schwab’s data set is likely skewed because of the nature of the firms they provide custodial and other services to. But even so, this statistic should scare you.
I firmly believe that all tax practices should be niched towards serving the needs of a particular profession or industry. I get a lot of pushback on this concept, which amuses me, because in literally every other professional services industry, specialization by niche is taken for granted as just something you do — even in larger public accounting firms. But small tax firms constantly push back against this concept, and I have no idea why.
How are these two things relevant to each other? Because what you choose to niche in also determines what complementary services you should also be providing to your clients. Schwab’s RIAs have figured out that they are more profitable by offering tax planning, estate planning, charitable giving planning, etc., on top of investment advisory services. You should do the exact same thing, and offer your clients the services they need that complement the services they already consume from you.
For example, if you focus on tax prep for high-income earners, then, hmmm…. Should you be doing their tax planning, not their financial advisor?
If you focus on 941 resolution for restaurants, bars, and clubs, doesn’t it also make sense for you to offer trade line consulting, expense reduction consulting, and menu planning consulting?
If you’re going to be the expert, be the expert, and serve the deeper needs of a narrow clientele.
To your success,