IRM 5.15.1

Fresh visual for IRS financial analysis and taxpayer representation

Executive Summary for the Taxpayer
The IRS’s June 29, 2026 revision to IRM 5.15.1 places greater operational emphasis on early asset verification, digital-asset analysis, and using available equity before considering other collection alternatives. [IRM 5.15.1 Manual Transmittal; IRM 5.15.1.2(1), (5)-(10); IRM 5.15.1.20(3)-(4)]

The revised Financial Analysis Handbook governs how IRS Collection employees secure, verify, and analyze financial information when determining a taxpayer’s ability to pay delinquent liabilities. [IRM 5.15.1.1(1)-(2)]

The June 29, 2026 transmittal supersedes the November 22, 2021 version and incorporates Interim Guidance Memorandum SBSE-05-0725-0041, International Collection Financial Standards, dated July 22, 2025. [IRM 5.15.1 Manual Transmittal]

I am Matthew Jones, a federally licensed IRS Enrolled Agent with 25 years of tax preparation experience and a background in financial analysis. The following explains what the revision means for individuals, businesses, estates, partnerships, corporations, and other taxpayers facing IRS collection activity.

Official IRS logo representing federal collection guidance

The Three Operational Shifts

1. Field visits and physical observation are broader

The revised IRM emphasizes face-to-face appointments and early physical verification of assets. Revenue officers may schedule visits to a taxpayer’s location to secure financial information, observe a business, and review supporting documents. [IRM 5.15.1.2(5)-(10)]

For individuals, the IRS may consider a scheduled or non-contact observational visit to identify assets, verify property condition, and observe lifestyle indicators when no safety concern exists. [IRM 5.15.1.4(3)]

The manual specifically adds or reinforces visits involving:

Motor vehicles, boats, and airplanes. [IRM 5.15.1.30(2)-(3)]
Real estate. [IRM 5.15.1.31(1)]
Inventory and business operations. [IRM 5.15.1.34(3)]
Machinery and equipment. [IRM 5.15.1.35(1)]
Business layout, employees, and operating assets. [IRM 5.15.1.4(2)]

If a taxpayer refuses to meet but provides financial information by telephone or correspondence, the revenue officer must generally make a field call to verify business assets unless the visit presents a safety risk. [IRM 5.15.1.2(8)]

2. Digital assets now have a dedicated section

IRM 5.15.1.26.1 was renamed Digital Assets and substantially revised. It defines digital assets by reference to IRC § 6045(g)(3)(D) and includes virtual currency, cryptocurrency, and non-fungible tokens. [IRM 5.15.1.26.1(1)-(2); IRC § 6045(g)(3)(D)]

Taxpayers must report digital assets on Forms 433-A, 433-B, and 433-F when those assets are relevant to the Collection Information Statement. [IRM 5.15.1.26.1(4)]

The IRS may request:

The type and description of the asset.
The asset’s name.
The number of units held.
Current valuation information. [IRM 5.15.1.26.1(3)]

The section cross-references the Digital Assets Knowledge Base, IRM 5.1.18.20.2 for locating digital assets, IRM 5.10.1.13.10 for seizure, and IRM 5.11.6.21.1 for digital-asset levies. [IRM 5.15.1.26.1(4)-(6)]

3. Full payment and equity come before many payment plans

The revised manual establishes an expectation that taxpayers use available equity to satisfy a liability before pursuing other collection alternatives. [IRM 5.15.1.20(3)]

The sequence is important:

Request immediate payment from cash or liquid assets. [IRM 5.15.1.3(2)(1)]
Request full payment from assets with sufficient equity that can be sold or pledged without creating hardship. [IRM 5.15.1.3(2)(2)]
Request a partial payment from available equity when full payment is not possible. [IRM 5.15.1.3(2)(3)]
Consider an Installment Agreement when the taxpayer cannot full pay. [IRM 5.15.1.17(1)(4)]

For valuation, Quick Sale Value is generally 80% of Fair Market Value, Forced Sale Value may reduce FMV by up to 25%, and Reduced Forced Sale Value is generally 60% of FMV. [IRM 5.15.1.21(3)-(4)]

A whole-life insurance policy may also be valued through cash surrender value, policy loan value, a life settlement, or a viatical settlement. [IRM 5.15.1.27(2)-(4)]

Federal tax forms and calculator used in financial analysis

1. Average Taxpayer

DETAILS

W-2 employees, 1099 individuals, homeowners, renters, and seniors should expect questions about income, homes, vehicles, boats, investments, retirement accounts, life insurance, and digital assets. [IRM 5.15.1.4(3); IRM 5.15.1.25-(31)]

The IRS may review six months of bank statements, credit-card activity, recurring transfers, and deposits from Venmo, Zelle, PayPal, Cash App, or similar peer-to-peer applications. [IRM 5.15.1.7]

Shared expenses with a spouse, roommate, domestic partner, or other non-liable household member may be allocated according to household income and responsibility for the expense. [IRM 5.15.1.5(1)-(7)]

PROS

National and local expense standards provide a baseline for necessary living expenses. [IRM 5.15.1.8(1)-(6)]
A taxpayer may receive a deviation from a standard when necessary expenses exceed the guideline and the excess is substantiated. [IRM 5.15.1.2(13)-(14)]
Economic hardship can protect a taxpayer from being required to sell or borrow against property when doing so would prevent payment of reasonable basic living expenses. [IRM 5.15.1.2(15); 26 CFR 301.6343-1(b)(4)]

CONS

Retirement accounts, whole-life policies, real estate equity, and digital assets may be considered collection sources. [IRM 5.15.1.26.1; IRM 5.15.1.27; IRM 5.15.1.28]
A field visit may be considered to observe a residence, vehicle, or property condition. [IRM 5.15.1.4(3); IRM 5.15.1.30(2); IRM 5.15.1.31(1)]
An affluent or luxurious standard of living does not qualify as economic hardship. [IRM 5.15.1.2(15); 26 CFR 301.6343-1(b)(4)]

2. Businesses

DETAILS

Small businesses, service businesses, sole proprietors, and self-employed taxpayers may need to provide Form 433-B information, business financial statements, bank statements, and cash-flow data. [IRM 5.15.1.2(2), (4)-(7); IRM 5.15.1.15-(16)]

An on-site appointment may be used to observe inventory, employees, business layout, machinery, equipment, and the actual operation. [IRM 5.15.1.4(2); IRM 5.15.1.34(3); IRM 5.15.1.35(1)]

The IRS may compare reported sales with Form 1099-K amounts and ask whether customers pay with virtual currency. [IRM 5.15.1.4(2); IRM 5.15.1.19(2)]

PROS

A documented income-producing asset may justify an adjustment for lost income if the asset is sold or pledged. [IRM 5.15.1.23(1)-(3)]
Cash-flow projections may support a payment arrangement when current obligations and taxes can be maintained. [IRM 5.15.1.16(2)-(3)]
Necessary cash business expenses may be allowed when substantiated. [IRM 5.15.1.18(1)-(3)]

CONS

Depreciation and other non-cash deductions are not allowable cash expenses in the ability-to-pay analysis. [IRM 5.15.1.18(2), (9)]
Excessive officer compensation may be disallowed and added back to business income. [IRM 5.15.1.2(16); IRM 5.15.1.18(5)]
If the taxpayer refuses a face-to-face meeting, a field call to verify business assets is generally required when safe. [IRM 5.15.1.2(8)]

3. Estate

DETAILS

The IRS may consider interests in estates and trusts, jointly held assets, life insurance, retirement accounts, and property titled in a decedent’s name when determining collection potential. [IRM 5.15.1.3(2)(5); IRM 5.15.1.22; IRM 5.15.1.27-(28)]

Executors, surviving spouses, beneficiaries, and other parties may need to establish ownership, control, liability, and the location of estate assets. The result depends on the liability, title documents, state law, and applicable collection statute. [IRM 5.15.1.13(2)-(4); IRM 5.15.1.17(2)]

PROS

Joint ownership may limit the taxpayer’s allocated equity to the taxpayer’s proportionate interest. [IRM 5.15.1.22(1)]
Retirement assets may have limited or no equity when the taxpayer cannot withdraw or borrow against them before separation or retirement. [IRM 5.15.1.28(5)]
Hardship considerations remain relevant when liquidation would impair necessary living expenses. [IRM 5.15.1.31(3); 26 CFR 301.6343-1(b)(4)]

CONS

A jointly held asset may still be considered as collateral for a loan against the liable owner’s share. [IRM 5.15.1.22(2)]
Assets held by another person may be examined under transferee, nominee, or alter-ego theories. [IRM 5.15.1.24(1)-(2); IRC § 6901]
Resolution must account for the Collection Statute Expiration Date. [IRM 5.15.1.17(2)]

4. Partnerships

DETAILS

Partnership cases may require both Form 433-B for the business and Form 433-A for the liable partner’s income, expenses, and assets. [IRM 5.15.1.2(4)]

State law generally determines whether a general partner is liable for partnership debts. A managing partner may also face a Trust Fund Recovery Penalty investigation under IRC § 6672 when responsible for unpaid trust-fund employment taxes. [IRM 5.15.1.14(3); IRC § 6672]

PROS

Income-producing partnership assets may be evaluated in relation to their effect on ongoing income. [IRM 5.15.1.23]
Proper separation between partnership and personal finances can clarify liability and collection potential. [IRM 5.15.1.13(2)-(4)]

CONS

Partnership equity, K-1 income, and a partner’s ownership interest may all affect the collection analysis. [IRM 5.15.1.6(3); IRM 5.15.1.14(3)]
LLC and partnership operations may be subject to on-site observation when the case is unresolved. [IRM 5.15.1.2(7); IRM 5.15.1.4(2)]
Personal exposure may exist even when the partnership itself is the primary operating entity. [IRM 5.15.1.13(4); IRC § 6672]

5. Corporations

DETAILS

Corporate assets generally are separate from an owner’s personal assets. However, the IRS may pursue transferee, nominee, or alter-ego theories when the facts support disregarding the separation. [IRM 5.15.1.14(4); IRM 5.15.1.24]

The IRS may analyze officer compensation, shareholder loans, dividends, retained earnings, corporate equity, and commingled funds. [IRM 5.15.1.18(5); IRM 5.15.1.37]

PROS

Proper books, separate accounts, written loans, and documented business use help establish the corporation’s separate existence. [IRM 5.15.1.18(5); IRM 5.15.1.37(2)]
Business assets necessary to produce income may receive adjusted treatment after liquidation or borrowing. [IRM 5.15.1.23]

CONS

Excessive officer compensation may be added back to business income. [IRM 5.15.1.18(5)]
Commingling may support further investigation of alter-ego or transferee liability. [IRM 5.15.1.18(5), (12)]
Trust-fund employment taxes may lead to investigation of responsible officers under IRC § 6672. [IRM 5.15.1.17(5); IRC § 6672]

6. Other Taxpayers

DETAILS

S corporations, LLCs, trusts, landlords, international taxpayers, Medicare and Medicaid providers, and households with non-liable members each require entity-specific analysis. Rental income is included in determining individual income, while international taxpayers may be subject to International Collection Financial Standards. [IRM 5.15.1.12(1)-(4); IRM 5.15.1.8(3)]

The IRS may research FATCA information, FBAR filings, foreign accounts, and foreign assets when relevant. [IRM 5.15.1.6(3)]

Medicare and Medicaid payments may be examined as potential levy sources, with the levy directed to the appropriate payer or managed-care organization. [IRM 5.15.1.39(1)-(3)]

PROS

Taxpayers in hardship may qualify for Currently Not Collectible treatment when financial analysis shows no present means of payment. [IRM 5.15.1.17(1)(5); IRM 5.16.1]
Low Income Taxpayer Clinics may assist eligible unrepresented taxpayers with financial statements. [IRM 5.15.1.2(1)]
The Taxpayer Bill of Rights applies to Collection employees’ duties. [IRM 5.15.1.1.7(2); IRC § 7803(a)(3)]

CONS

Community-property rules may expose certain non-liable spouse income or assets to collection analysis. [IRM 5.15.1.5(2)]
Landlords must account for net rental income and may need to identify the underlying property and related equity. [IRM 5.15.1.12(4), (8)]
LLC members, S corporation shareholders, and responsible persons may have collection exposure separate from the entity’s general tax liability. [IRM 5.15.1.13(5); IRM 5.15.1.14(4)-(5); IRC § 6672]

What Taxpayers Should Do Now

Prepare before the IRS requests a Collection Information Statement:

Gather at least six months of bank statements, including online-bank and payment-application records. [IRM 5.15.1.2(5); IRM 5.15.1.7]
Collect mortgage, vehicle, retirement, brokerage, life insurance, and real-estate documents. [IRM 5.15.1.7]
Prepare for a field visit if the IRS needs to verify a residence, business, vehicle, inventory, equipment, or real estate. [IRM 5.15.1.2(5)-(10); IRM 5.15.1.20(4)]
Identify every digital asset, including coins, tokens, NFTs, custodial accounts, and payment activity. [IRM 5.15.1.26.1(1)-(4)]
Obtain current digital-asset valuations before the IRS conducts its own research. [IRM 5.15.1.26.1(3)]
Calculate equity after considering the appropriate valuation method, senior encumbrances, and hardship factors. [IRM 5.15.1.21(1)-(5); IRM 5.15.1.31(3)]
Evaluate whether an asset can be borrowed against rather than sold, particularly when it produces income. [IRM 5.15.1.20(3); IRM 5.15.1.23(1)-(3)]

The revised handbook does not mean every taxpayer must immediately sell a home, retirement account, vehicle, or business asset. It does mean the taxpayer should be prepared to explain ownership, value, debt, liquidity, income production, and the hardship consequences of liquidation. [IRM 5.15.1.20(2)-(5); IRM 5.15.1.23]

Professional representation can help organize the financial record, communicate with the revenue officer, identify collection alternatives, and protect the taxpayer’s procedural rights. Brick Taxes provides IRS representation for audits, collections, liens, levies, appeals, payment plans, and Offers in Compromise through its IRS tax resolution service. Contact Brick Taxes at 732-540-1040 or visit BrickTaxes.com.

IRM 5.15.1

Official Authorities Referenced