IRS Asset Focus

Organized financial documents, property records, and digital asset analysis tools arranged in a high-contrast federal tax-resolution composition

Executive Summary for the Taxpayer. The IRS’s June 29, 2026 revision to IRM 5.15.1 directs Collection employees to examine available assets, equity, income, expenses, and business operations more deliberately before approving a collection alternative. This is internal IRS guidance for Collection employees, not a statute or regulation, and it does not automatically change every taxpayer’s legal rights or require liquidation of every asset. IRM 5.15.1

What the June 29, 2026 update actually changes

The revised Financial Analysis Handbook supersedes the November 22, 2021 version and incorporates interim guidance on international collection financial standards. Its purpose is to help IRS Collection employees secure, verify, and analyze financial information to determine a taxpayer’s ability to pay delinquent liabilities. IRM 5.15.1 Manual Transmittal

The operational emphasis is significant:

  • During the initial investigative interview, the Revenue Officer is instructed to request full payment, encourage prompt payment, and request liquidation of an asset capable of producing full or substantial payment. IRM 5.15.1.2
  • If immediate payment is not possible, the officer may secure a Collection Information Statement, or CIS, and analyze liquid assets, equity, income-producing property, disposable income, and borrowing capacity. IRM 5.15.1.2
  • The manual expands instructions concerning business operations, inventory, machinery, real estate, vehicles, boats, aircraft, securities, digital assets, life insurance, retirement accounts, and assets held through other persons or entities. IRM 5.15.1.20–5.15.1.38
  • The decision framework includes full or partial payment, a Notice of Federal Tax Lien determination, enforcement, an Installment Agreement, Currently Not Collectible status, and an Offer in Compromise. IRM 5.15.1.17

This can improve consistency and recognition of genuine hardship. It can also increase documentation demands, financial verification, asset scrutiny, field-visit exposure, and pressure to use available equity.

Valuation is not one universal formula

The revised IRM distinguishes among several valuation concepts:

  • Fair Market Value, or FMV: The price a willing buyer and willing seller would agree upon in an arm’s-length transaction with knowledge of relevant facts. IRM 5.15.1.21
  • Quick Sale Value, or QSV: A reduction from FMV reflecting financial pressure and a sale generally expected within approximately 90 days. The IRM states that 80% of FMV is generally used as a starting point, but asset type and market conditions may justify a different result. IRM 5.15.1.21
  • Forced Sale Value, or FSV: A reduction reflecting a sale that is not made by a willing seller, such as a foreclosure. The IRM states that FMV may be reduced by an amount not exceeding 25% in the circumstances described by related seizure guidance. IRM 5.15.1.21
  • Reduced Forced Sale Value, or RFSV: A valuation concept recognizing additional factors affecting property sold through an administrative distraint sale. The IRM generally references 60% of FMV, but the figure is not an automatic result in every case. IRM 5.15.1.21

The applicable value depends on the asset, market, encumbrances, lien priority, liquidation circumstances, and the specific collection decision. A taxpayer should not assume that the IRS will accept book value, an unsupported estimate, or a fixed discount without documentation.

Collection Information Statements and current financial data

The three principal forms described in IRM 5.15.1 are:

  • Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals: Used for individuals and self-employed taxpayers with detailed information concerning income, living expenses, assets, liabilities, and ownership interests. Form 433-A
  • Form 433-B, Collection Information Statement for Businesses: Used to analyze a business’s income, expenses, assets, liabilities, accounts receivable, inventory, equipment, and other financial information. Form 433-B
  • Form 433-F, Collection Information Statement: Used primarily by the Automated Collection System and IRS campuses for individual cases, subject to the limitations stated in the IRM. It cannot be used for Offer in Compromise cases or abusive tax-avoidance-transaction cases. Form 433-F

A submitted CIS should generally contain information no older than six months. If the investigation continues beyond 12 months, the IRS may require updated information, particularly when income, assets, expenses, or other facts have materially changed. IRM 5.15.1.2

1) Average Taxpayer

For an individual wage earner, retiree, homeowner, or family, the update means that the IRS may compare the CIS with tax returns, bank deposits, credit records, property records, vehicle registrations, retirement statements, brokerage accounts, and other available information. Income may include wages, tips, interest, dividends, pensions, rental income, support payments, and other recurring or fluctuating sources. IRM 5.15.1.3

Shared household expenses may be allocated according to the liable taxpayer’s proportion of household income, although the non-liable person’s income and assets are not automatically included as the taxpayer’s property. Community-property rules and state law can produce different results. IRM 5.15.1.5

Allowable Living Expense standards cover basic food, clothing, health care, housing, utilities, and transportation. Expenses exceeding standards may be allowed when necessary, reasonable, substantiated, and connected to health, welfare, or production of income. IRM 5.15.1.8

Pros

  • Better documentation of medical, disability, family, housing, and income-related hardship may support an individualized allowance. IRM 5.15.1.2
  • Income fluctuations and seasonal earnings are expressly relevant to the analysis. IRM 5.15.1.3
  • Home equity is not required to be used when sale or borrowing would cause economic hardship. IRM 5.15.1.31

Cons/Risks

  • Real estate, vehicles, securities, retirement accounts, digital assets, and life insurance may affect payment ability. IRM 5.15.1.20–5.15.1.31
  • Shared expenses may be reduced when another household member contributes income. IRM 5.15.1.5
  • Voluntary retirement contributions and certain consumer debts may not be treated as necessary expenses. IRM 5.15.1.11

Preparation checklist

  • Gather six months of bank statements, recent pay records, retirement and brokerage statements, loan balances, insurance policies, and property records.
  • Separate personal expenses from business expenses.
  • Document medical costs, court-ordered payments, disability-related costs, and unusual housing or transportation needs.
  • Identify digital assets, foreign accounts, jointly held property, and interests in trusts or estates.
  • Compare current income with prior-year income and explain substantial changes.

2) Businesses

For businesses, the IRS is directed to examine not only reported profit but also cash flow, bank deposits, accounts receivable, inventory, equipment, real estate, payment-processor deposits, and the physical operation of the business. Business financial statements may substitute for portions of Form 433-B, but they do not eliminate the need for accurate asset and expense analysis. IRM 5.15.1.15–5.15.1.16

The revised text specifically adds or expands consideration of visits to business locations to observe operations, inventory, employees, equipment, and asset condition when no safety concern has been identified. This is not a directive that every business will be visited, but it increases the importance of maintaining records that match the actual operation. IRM 5.15.1.2

Depreciation, depletion, amortization, and net operating losses may reduce taxable income but are generally non-cash items for this ability-to-pay analysis. Excessive officer compensation may be reduced and added back to business income after considering the facts and circumstances. IRM 5.15.1.18

Pros

  • Accurate cash-flow evidence can show that a business needs its equipment, inventory, or receivables to remain viable. IRM 5.15.1.23
  • Seasonal or recovering businesses may receive an analysis based on a realistic annual average rather than one unusually strong month. IRM 5.15.1.15
  • A documented business plan may support a structured Installment Agreement or temporary collection delay where current taxes can be paid. IRM 5.15.1.16

Cons/Risks

  • Undisclosed deposits, commingled funds, uncollected receivables, or personal use of business assets may increase collection potential. IRM 5.15.1.4
  • Book value may understate the market value of fully depreciated assets. IRM 5.15.1.15
  • Trust Fund Recovery Penalty issues can expose responsible individuals to personal liability for certain unpaid employment taxes. IRC § 6672

Preparation checklist

  • Maintain current profit-and-loss statements, balance sheets, cash-flow projections, and six months of business bank statements.
  • Reconcile merchant, peer-to-peer, and payment-processor deposits.
  • Prepare schedules for receivables, inventory, equipment, vehicles, real estate, loans, and liens.
  • Explain depreciation, depletion, NOLs, officer compensation, shareholder loans, and related-party transactions.
  • Keep federal tax deposits, payroll filings, estimated payments, and current returns compliant.

Business records, payroll information, and asset schedules organized for IRS financial analysis

3) Estates

An estate may involve real estate, securities, life insurance proceeds, retirement accounts, trusts, jointly held property, and interests transferred before or after death. The financial analysis must distinguish the decedent’s property, estate property, beneficiary interests, and liabilities under applicable state law and federal collection rules. IRM 5.15.1.20–5.15.1.24

The IRS may examine whether assets were distributed before federal liabilities were resolved and whether a recipient is potentially a transferee. That does not mean every beneficiary becomes personally liable; liability depends on the governing law, the transfer, the property interest, and the specific assessment. IRM 5.17.13 IRM 5.17.14

Pros

  • A complete estate inventory can establish that assets are unavailable, encumbered, exempt, or insufficient to satisfy the liability. IRM 5.15.1.21
  • Accurate valuation may prevent reliance on outdated appraisals or nominal probate values. IRM 5.15.1.31
  • Coordinated handling can identify whether an estate, beneficiary, transferee, or separate entity is the liable party. IRM 5.15.1.13

Cons/Risks

  • Distributions, property transfers, and beneficiary interests may receive increased scrutiny. IRM 5.15.1.24
  • Real estate, life insurance, retirement assets, and securities may require current valuation and lien analysis. IRM 5.15.1.26–5.15.1.28
  • Delayed administration can complicate the collection statute, creditor priority, and required filings.

Preparation checklist

  • Assemble the will, trust documents, probate filings, deeds, account statements, insurance records, and beneficiary designations.
  • Track every distribution, sale, transfer, and payment from estate accounts.
  • Obtain payoff statements and current appraisals where valuation is disputed.
  • Identify whether property was jointly owned, held in trust, or transferred before death.
  • Obtain legal advice concerning transferee liability before distributing estate assets.

4) Partnerships

A partnership generally reports income through Form 1065 and Schedule K-1s, while the collection analysis depends on whether the partnership, an individual partner, or another entity is the liable taxpayer. Partnership assets are not automatically the personal assets of every partner, and a partner’s personal assets are not automatically partnership assets. State law and the partnership agreement matter. IRM 5.15.1.13–5.15.1.14

Where the individual partner is the liable taxpayer, the IRS may need both Form 433-A information for the individual and Form 433-B information concerning the partnership’s income and allowable business expenses. IRM 5.15.1.2

Pros

  • Separate records may demonstrate that partnership property is needed to produce income. IRM 5.15.1.23
  • A clear operating agreement can help establish ownership percentages and distributions.
  • Verified K-1 income and actual cash distributions can distinguish taxable allocations from available cash.

Cons/Risks

  • Undisclosed partnership interests, distributions, or capital accounts may affect a partner’s payment ability. IRM 5.15.1.6
  • General-partner liability may arise under state law, while responsible individuals may face Trust Fund Recovery Penalty exposure for trust-fund employment taxes. IRM 5.15.1.14
  • Commingling can create alter-ego, nominee, or transferee questions without automatically eliminating legal separateness. IRM 5.17.14

Preparation checklist

  • Maintain the partnership agreement, capital accounts, K-1s, distribution history, and current balance sheet.
  • Reconcile partner draws with reported income and bank activity.
  • Document restrictions on selling or borrowing against a partnership interest.
  • Separate partnership debts from each partner’s personal debts.
  • Address payroll-tax exposure promptly when employees are involved.

5) Corporations

A corporation generally has a separate legal existence and owns property in its own name. Corporate assets are not automatically available for an owner’s personal tax liability, and shareholder assets are not automatically available for the corporation’s liability. Exceptions may involve transferee liability, nominee or alter-ego theories, fraudulent transfers, or a separate Trust Fund Recovery Penalty assessment. IRM 5.15.1.13–5.15.1.14

For a corporation’s liability, the IRS may examine Form 433-B, corporate financial statements, shareholder loans, officer compensation, corporate-owned real estate, securities, retirement plans, inventory, and equipment. For an S corporation, K-1 allocations may affect the shareholder’s individual analysis, but a K-1 allocation is not identical to a cash distribution. IRM 5.15.1.15

Pros

  • Corporate separateness can protect unrelated personal assets when records and operations support the legal structure. IRM 5.15.1.14
  • Detailed records can show that officer compensation, equipment, inventory, and receivables are necessary for continued operations.
  • Accurate valuation may support a payment plan that preserves a viable income-producing business. IRM 5.15.1.23

Cons/Risks

  • Excessive officer compensation, personal benefits, luxury assets, or shareholder loans may be added back or investigated. IRM 5.15.1.18
  • A corporation’s non-cash deductions do not necessarily reduce its ability to pay in the CIS analysis. IRM 5.15.1.18
  • Unpaid trust-fund employment taxes may create individual exposure under IRC § 6672. IRC § 6672

Preparation checklist

  • Maintain separate corporate accounts, cards, books, payroll records, minutes, stock ledgers, and loan documents.
  • Reconcile officer compensation and non-cash benefits to payroll and corporate records.
  • Document shareholder loans with notes, payments, interest, and security where applicable.
  • Prepare current asset schedules with FMV evidence, liens, serial numbers, and location.
  • Keep Forms 941, federal tax deposits, corporate returns, and state payroll obligations current.

6) Other Situations

The update reaches several structures and asset types that often create confusion:

  • Sole proprietors and self-employed taxpayers: The business and owner are generally treated as one for collection purposes, so business income and expenses flow into the owner’s individual analysis. IRM 5.15.1.14
  • Single-member LLCs: A disregarded entity is generally treated as separate from its owner for federal income-tax classification, but employment-tax liability and state-law ownership questions require separate analysis. Treas. Reg. § 301.7701-3 IRM 5.15.1.14
  • Digital assets: The revised section requires consideration of cryptocurrency, other virtual currency, NFTs, wallets, exchanges, units held, and current value. IRM 5.15.1.26.1
  • Retirement accounts: The IRS may consider withdrawal value, loans, penalties, retirement proximity, and whether the taxpayer depends on the account for necessary living expenses. IRM 5.15.1.28
  • Life insurance: Whole-life and similar policies may be reviewed for cash surrender value, loan value, or potential life-settlement or viatical-settlement value. The IRM’s cited ranges are valuation guidance, not guaranteed offers or universal percentages. IRM 5.15.1.27
  • International assets: International Collection Financial Standards and specialized research may apply to taxpayers living abroad or holding foreign accounts and property. IRM 5.15.1.8
  • Jointly held property: Equity is generally allocated equally unless the owners establish a different ownership or contribution arrangement. IRM 5.15.1.22

Pros

  • The manual recognizes income-producing assets and permits adjustments when liquidation would impair the income stream or create hardship. IRM 5.15.1.23
  • International standards may prevent arbitrary use of U.S. living-expense figures for taxpayers abroad. IRM 5.15.1.8
  • Safety exceptions permit alternative contact methods, including phone, correspondence, secure digital tools, or an IRS office appointment. IRM 5.15.1.2

Cons/Risks

  • Digital assets and foreign property may be identified through tax records, financial records, third-party information, or specialized research. IRM 5.15.1.6
  • Voluntary retirement contributions may not be treated as allowable expenses while the taxpayer claims an inability to pay. IRM 5.15.1.28
  • A request to borrow against jointly held property does not necessarily mean the IRS can seize the non-liable owner’s entire interest. IRM 5.15.1.22

Preparation checklist

  • Inventory every wallet, exchange, foreign account, policy, retirement plan, trust interest, and jointly held asset.
  • Obtain current statements and document penalties, withdrawal restrictions, ownership, and tax consequences.
  • Preserve records showing which entity owns an asset and which person is legally liable.
  • Prepare a written hardship explanation supported by medical, housing, income, or business records.
  • Review whether an Installment Agreement, CNC status, Offer in Compromise, lien resolution, or voluntary asset payment is appropriate.

Taxpayer rights and the related IRS manuals

IRM 5.1.10 governs contact procedures and initial investigative interviews, including representative contacts and safety considerations. IRM 5.1.10

IRM 5.8 governs Offers in Compromise, including investigation and financial analysis. IRM 5.10 and 5.11 govern seizure, sale, and levy procedures; IRM 5.14 addresses Installment Agreements; IRM 5.16.1 addresses Currently Not Collectible determinations; and IRM 5.17 supplies legal background for liens, levies, third-party liability, bankruptcy, and related issues. IRM 5.8 IRM 5.10 IRM 5.11 IRM 5.14 IRM 5.16.1 IRM 5.17

The Taxpayer Bill of Rights includes the rights to be informed, quality service, pay no more than the correct amount, challenge the IRS’s position, retain representation, privacy, and confidentiality. A taxpayer may ask to consult an authorized representative, and an IRS employee must suspend the interview to permit that consultation. Taxpayer Bill of Rights IRM 5.1.10.7.1

The IRS must protect return information under IRC § 6103, and third-party contacts are subject to notice and disclosure limitations. When a taxpayer disputes an economic-hardship determination, the IRM directs consideration of assistance from the Taxpayer Advocate Service. IRC § 6103 Taxpayer Advocate Service

Brick Taxes provides IRS representation through Matthew Jones, a federally licensed Enrolled Agent with 25 years of tax-preparation experience and an accounting background. Representation can help organize the CIS, distinguish entity and personal liabilities, document hardship, evaluate assets, and communicate with Collection within the applicable procedures.

What This Means for Practitioners

  • The Pre-RO Window is Critical: Because the updated IRM sharpens the Revenue Officer's mandate to analyze liquidation potential, available equity, and physical asset verification, including vehicles, boats, real estate, inventory, and digital assets, the strategic posture changes once a field Revenue Officer is assigned and active case development begins. IRM 5.15.1.2 IRM 5.15.1.20–5.15.1.26.1 Handling compliance correction, asset positioning, and streamlined resolution options before assignment to a field office remains the stronger administrative path under current Collection procedures. IRM 5.1.10 IRM 5.14 IRM 5.16.1
  • No Corners Cut: With the IRS emphasizing technical compliance in financial analysis and collections, practitioners should prepare Form 433-A and Form 433-F submissions with fully substantiated asset, income, expense, and liability support, anticipating deeper review of lifestyle indicators, digital holdings, and physical asset values by Collection personnel operating under the 2026 handbook revisions. Form 433-A Form 433-F IRM 5.15.1.2 IRM 5.15.1.3 IRM 5.15.1.26.1

Official Authorities Referenced