The IRS has recently revised the guidance Revenue Officers use to evaluate a taxpayer’s finances use to evaluate a taxpayer’s finances and ability to pay. They signal a more aggressive, asset focused approach to collecting unpaid taxes

What’s Changed?

Effective July 2026, Revenue Officers are now directed to request full payment at the initial interview. Before considering many payment arrangements, they may look for assets that can be:

• Sold to pay the tax debt;
• Used as collateral for a loan;
• Borrowed against; or
• Applied toward a substantial upfront payment.

As a result, taxpayers may face greater pressure to use home equity, investments, retirement accounts, digital assets, or other property before the IRS approves an installment agreement, partial-payment installment agreement, currently not collectible status, or offer in compromise.

Expect more questions

The IRS financial interview may also become more detailed and intrusive.

Revenue Officers may ask probing questions about a taxpayer’s:

• Income and future earning potential;
• Employment and professional history;
• Health and age;
• Real estate, vehicles, and personal property;
• Retirement accounts and investments;
• Cryptocurrency and other digital assets; and
• Ability to meet ordinary living expenses.

Business taxpayers should also be prepared for onsite visits to verify assets and observe business operations. In some individual cases, the Revenue Officer may request a meeting at the taxpayer’s residence.

Bank statements will receive closer attention

Revenue Officers may examine bank statements for undisclosed income and assets. They may also look for recurring deposits from Venmo, Zelle, PayPal, Cash App, and similar platforms.

Amounts deposited through these services may be questioned and potentially treated as income unless the taxpayer can properly explain and document them.

Life insurance may now be examined differently

One especially important development involves life insurance. The IRS is now charged with balancing taxpayer’s hardship claims against the marketability of certain life insurance contracts.

For certain taxpayers over age 65 or those who are terminally ill, the IRS may investigate whether a policy could be sold in the secondary market—even if it has little or no cash surrender value.

Preparation matters more than ever

The message is clear: waiting until a Revenue Officer becomes involved can make a collection case more difficult, intrusive, and expensive.

Effective representation requires more than knowing yesterday’s rules. It requires monitoring IRS procedural changes, understanding how Revenue Officers are being instructed, and preparing for their questions before the first meeting.

That is why I continually study changes to the Internal Revenue Manual and translate them into practical strategies for taxpayers and the professionals who advise them.

Ron Friedman CPA helps taxpayers understand their IRS collection options and build a strategy around their actual financial situation.

If you or someone you know owes back taxes, has been contacted by an IRS revenue officer, or is worried about IRS collection action, call Ron Friedman CPA at 914.712.6919 for a consultation.

In July, a Miami man pleaded guilty to filing a false tax return. He’d filed returns for himself and for several trusts he controlled, reporting income the trusts never earned and tax withholding that was never paid. Together, those returns asked the IRS for more than $4.2 million in refunds.

He’s scheduled to be sentenced in October and faces up to three years in prison.

Cases like this almost always start with a pitch.

The Pitch

Someone tells you there’s a way to get back a lot more than you expected. Maybe it’s a preparer who says he knows something the others don’t. Maybe it’s a seminar, a Facebook group, or a video about a trust structure, a special filing, or a provision that lets you recover taxes you supposedly overpaid years ago. There’s usually a line in there about how this is what wealthy people do and nobody tells the rest of us.

The return gets filed. You sign it. And for a while, nothing happens.

Why It Comes Apart

The IRS matches your return against what your employer, your bank, and every other payer already reported. Withholding that was never paid is one of the easiest things in the system to spot. That’s why these cases so often end in a courtroom instead of a correction letter.

When it unwinds, the promoter isn’t the one holding the bill. You are. That can mean paying the refund back with interest, a civil fraud penalty of up to 75% of the underpayment, a $5,000 penalty for a frivolous return, and, when the IRS believes you knew, a criminal referral.

You signed the return. That signature says the information on it is true, and it belongs to you no matter who typed it.

Signs You Should Slow Down

• A refund amount promised before anyone has looked at your documents
• A fee calculated as a percentage of your refund
• A preparer who won’t sign the return or give you their PTIN
• A refund routed anywhere other than your own account
• Any strategy explained as secret, suppressed, or something the IRS doesn’t want you to know about
• Being told not to ask questions, or not to keep a copy

If You Already Signed One

You’re not the first, and coming forward on your own puts you in a much better position than waiting for the IRS to find it. Amended returns, voluntary disclosure, and penalty relief are all on the table, and which ones apply depends on how much time has passed and what the IRS already knows.

Doing nothing is the one option that gets worse every month.

How We Can Help

If you’ve received an IRS notice about a refund or an audit, or you’re worried about a return someone filed on your behalf, call us before you respond to anything.

At Ron Friedman CPA, we review prior filings, deal with the IRS on your behalf, correct returns where correcting them is the right move, and work out a plan to get you back in good standing.

Contact Ron Friedman CPA today for a confidential consultation.