Sheet 1: OVERVIEW -->

	
	

		
ATP TOOL FOR PARTIAL-YEAR DATA FOR BUSINESSES
	
	

		


	
	

		
[This tab is intentionally blank; it is merely a placeholder to indicate the following group of "OVERVIEW" tabs in this workbook.]
	



Sheet 2: Introduction

	
	
	

		
ATP TOOL FOR PARTIAL-YEAR DATA FOR BUSINESSES
		


		


	
	

		


		


		


	
	

		
Introduction
		


		


	
	

		


		


		


	
	

		
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Purpose: This "ATP Tool for Partial-Year Data for Businesses" evaluates whether there are differences in a business' financial data between the current partial-year period and the same partial-year periods in prior years, on a monthly and/or year-to-date basis. This tool is generally only used for settlement purposes, and a case team is not required to use it.
		
	

		


		
	

		


		
	

		


		


		


	
	

		
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Relationship to ABEL: This tool is designed to be used in conjunction with the ABEL model. ABEL uses three to five years of a business' full-year tax return data to develop a statistical extrapolation of the business' future after-tax cash flows, generally assuming that the future will be like the recent past. ABEL compares the present value of its predicted after-tax cash flows across different probability levels to any required compliance costs and the proposed penalty amount. Based on that comparison, ABEL estimates a percentage probability that the business can afford the proposed penalty after meeting any required compliance costs. This percentage probability level serves as the model's ability-to-pay (ATP) conclusion. It is then up to the case team on a case-by-case basis to consider the ABEL model outputs and then determine the appropriate probability level cutoff when developing its ultimate ATP conclusion.
		
	

		


		
	

		


		
	

		


		
	

		


		
	

		


		
	

		


		


		


	
	

		
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When and How to Use This Partial-Year Tool: If a business asserts that it has experienced significant changes in financial performance since the latest period of historical annual tax return data, this tool can help the case team evaluate that assertion pending availability of full-year data for the current year. This tool is designed to indicate whether there are differences between the current partial-year period and prior partial-year periods (i.e., for a given line item, has the business’ financial performance declined, improved, or remained constant?). It is the case team's responsibility to interpret any changes the tool identifies; the tool makes no causality assessments, nor does it return any ATP conclusions. To assess the partial-year data, the case team should:
		
	

		


		
	

		


		
	

		


		
	

		


		
	

		


		


		


	
	

		


		
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Review the "Financial Profile Monthly" tab: This tab shows monthly financial statements for the current partial-year period relative to historical full-year periods. The historical monthly data for full years can assist the case team with evaluating factors such as the monthly seasonality of the business, which may suggest that the business typically does better in certain months of the year compared to other months.
	
	

		


		


		
	

		


		


		
	

		


		


		


	
	

		


		
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Review the "Financial Profile YTD" tab: This tab shows year-to-date (YTD) financial statements for the current partial-year period relative to prior year-to-date periods. Analysis columns to the right indicate the numeric and percentage changes from the current year-to-date period relative to the immediately preceding year-to-date period, and relative to an average of the year-to-date periods across all historical years provided.
	
	

		


		


		
	

		


		


		
	

		


		


		


	
	

		


		
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Review the "Financial Charts" tab: This tab shows year-to-date and monthly charts for three key line items: revenues, net income, and pre-tax cash flow. The year-to-date charts provide a graphical representation of how the current partial-year period compares to the same partial-year periods in prior years, and the monthly charts provide a visual of the business' seasonality by month for all years of data provided. The three line items depicted in the charts can help the case team understand how the business' sales (i.e., revenues), net income (i.e., revenues minus expenses), and cash flow may have changed in the current partial year.
	
	

		


		


		
	

		


		


		
	

		


		


		
	

		


		


		
	

		


		


		


	
	

		


		
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Across all three of these tabs: Pay particular attention to the pre-tax cash flow from the current partial-year period relative to prior periods. Recall that the ABEL model bases its ATP conclusion on predicted after-tax cash flows, generally assuming that the future will be like the recent past. If the current partial-year data suggest that there are significant differences in pre-tax cash flows relative to prior periods, adjusting the ABEL ATP conclusion (which is based on historical full-year data) may be warranted. As ABEL output reminds the user, however, be sure to examine ability to pay potential beyond cash flow (e.g., from unnecessary expenses, assets unrelated to business operations, loans to shareholders, and/or other sources).
	



Sheet 3: Instructions

	
	
	

		
ATP TOOL FOR PARTIAL-YEAR DATA FOR BUSINESSES
		


		


	
	

		


		


		


	
	

		
Instructions
		


		


	
	

		


		


		


	
	

		
Key:
		


		


	
	

		


		


		


	
	

		


		
Users can enter inputs/information only in the cells highlighted in yellow. 
		


	
	

		


		


		


	
	

		
First, the case team should enter data inputs from the Data Request Form into the ATP Tool: *,**
		


		


	
	

		


		


		


	
	

		
A)
		
Transfer the busness' entries from the "General Inputs" tab in the "Data Request Form" workbook to the "General Inputs" tab of this workbook.
		


	
	

		


		
i)
		
Transfer the information about the business (#1-4). 
	
	

		


		
ii)
		
Transfer the information about the time period covered by the financial data included in this response (#5-7). 
	
	

		


		
iii)
		
Transfer the information about the individual providing this response (#8-9). 
	
	

		


		
iv)
		
Indicate whether the business provided a signed certification asserting the veracity of the information provided (#10). 
	
	

		
B)
		
Transfer the business' entries from the "Financial Inputs" tab in the "Data Request Form" workbook to the "Financial Inputs" tab of this workbook.
		


	
	

		


		
i)
		
Copy/paste the year-to-date monthly financial data for 2020 for all select line items in the "Financial Inputs" tab. 
	
	

		


		
ii)
		
Copy/paste the historical monthly financial data for the last one to five years for all line items in the “Financial Inputs” tab. 
	
	

		


		


		


	
	

		


		
*When entering financial data in the "Financial Inputs" tab, enter any negative numbers as negative numbers. 
		


	
	

		


		
**The "Line References" tab contains definitions for each line item in the "Financial Inputs" tab. 
		


	
	

		


		


		


	
	

		
Then, the case team should review the ATP Tool analysis:
		


		


	
	

		


		


		


	
	

		
C)
		
Review the "Financial Profile Monthly" tab for monthly summary-level financial statements for the business (Columns B:BV). 
		


	
	

		
D)
		
Review the "Financial Profile YTD" tab for: 
		


	
	

		


		
i)
		
Year-to-date ("YTD") summary-level financial statements for the business (Columns B:H). 
	
	

		


		
ii)
		
Comparisons of the 2020 YTD results to the 2019 YTD results and to the annual average YTD results over the last one to five years (Columns J:K). 
	
	

		
E)
		
Review the "Financial Charts" tab for graphical displays of monthly and year-to-date results for key line items (Columns B:O). 
		


	
	

		


		


		


	
	

		
In addition, outside the ATP Tool, the case team should:
		


		


	
	

		


		


		


	
	

		
F)
		
Review any separate written response(s) by the business describing the current partial-year impacts on the business' finances.