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The IRS has unveiled plans to crack down on tax preparers with “questionable practices.”
This news comes amid heightened scrutiny of a popular small business tax credit.
The agency’s research suggests “bad actors” may disproportionally file tax returns for “vulnerable filers,” which may contribute to higher audit rates.
“I think it’s something that [the IRS] definitely needs to make a high priority,” said enrolled agent Josh Youngblood, owner of The Youngblood Group.

IRS Commissioner Daniel Werfel testifies before the Senate Finance Committee on April 19, 2023.
Chip Somodevilla | Getty Images

IRS scrutiny of the employee retention credit

The plan is part of the agency’s elevated focus on employee retention credit claims, according to April Walker, lead manager for tax practice and ethics with the American Institute of CPAs.
A pandemic-era tax break, the employee retention credit, or ERC, was designed to support small businesses that kept employees on payroll during shutdowns or revenue declines in 2020 and 2021.

Worth thousands per employee, the program sparked a cottage industry of specialist firms pushing businesses to amend payroll returns to claim the complicated tax break.
Roughly one week ago, the IRS announced plans to halt processing for the popular credit amid a “surge of questionable claims,” a move that the AICPA applauded. The processing pause for new claims will last at least through the end of 2023.

IRS shifting enforcement to higher earners

Meanwhile, the agency has also announced plans to reduce the number of audits on lower-income filers, while targeting unpaid taxes from higher earners, partnerships and large corporations.
In the same letter, Werfel shared IRS plans to “substantially” decrease the volume of so-called correspondence audits, or exams conducted by mail, for certain credits. He included the earned income tax credit, a tax break claimed by low- to moderate-income filers, which has been prone to mistakes due to complex eligibility requirements.

It’s long been recognized that correspondence audits have a lot of problems.

Chuck Marr
Vice president for federal tax policy at the Center on Budget and Policy Priorities

“It’s long been recognized that correspondence audits have a lot of problems,” said Chuck Marr, vice president for federal tax policy at the Center on Budget and Policy Priorities, noting that many filers don’t receive or understand the notices.
During fiscal year 2020, more than $16 billion of the credit was claimed improperly — over one-quarter of the total paid — according to the National Taxpayer Advocate’s 2022 report to Congress.
While IRS audit rates have dropped overall, the rates have declined more slowly for filers claiming the earned income tax credit than higher earners. “The IRS audits a higher percentage of taxpayers with the earned income tax credit than any other taxpayers, except those with at least $5 million of total positive income,” National Taxpayer Advocate Erin Collins wrote in her 2022 report.

‘Bad actors’ target tax returns for ‘vulnerable filers’

The agency’s research suggests “bad actors” may disproportionally file tax returns for “vulnerable filers,” such as lower earners, filers of color or those with limited English proficiency, according to Werfel’s letter. He said this may contribute to higher audit rates for these filers.
The IRS in May said Black Americans are significantly more likely to face an audit, confirming findings published by economists from Stanford University, the University of Michigan, the U.S. Department of the Treasury and the University of Chicago.
“Over time, we believe stepped-up efforts to stop unscrupulous preparers that target this population, will lead to higher quality tax preparation and increased return accuracy, thereby reducing the number of individual taxpayers at risk of audit,” Werfel wrote. More

Delta Air Lines is giving employees up to $1,000 to boost their emergency savings — and more than 90,000 workers are eligible.
Other companies, including Best Buy, Levi’s and Starbucks, have also introduced an emergency-savings benefit.
The ability to reduce financial stress and boost productivity will encourage many more employers to follow suit, according to John Hope Bryant, chairman and CEO of Operation Hope.

Between inflation and economic instability, Americans have depleted most of what they had in their savings accounts.
More than half of all Americans now live paycheck to paycheck and most adults — 57% — cannot afford a $1,000 emergency expense, a Bankrate survey from earlier this year found.

Meanwhile, experts say having a cash reserve is key and can prevent workers from turning to high-interest credit cards or taking hardship withdrawals from their retirement accounts.
To address the savings crisis, a growing number of employers are stepping in.
Already, Delta Air Lines, Starbucks, Best Buy and Levi’s, among others, have introduced some type of emergency-savings benefit, many as a result of the new retirement legislation in Secure 2.0 — a law enacted in December that focuses on improving retirement security by making it easier for workers to build and access emergency cash.
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“The legislation has definitely started more conversations,” said Katie Taylor, vice president of planning and engagement at Fidelity Investments.

“The ability for an employer to help their employees to feel they have solutions in place to manage their overall finances is really important,” Taylor said.

Delta is offering workers up to $1,000

Delta Air Lines planes at Hartsfield-Jackson Atlanta International Airport.
Jeff Greenberg | Universal Images Group | Getty Images

Under Delta’s emergency savings program, which is available to all employees below the director level, workers receive $750 directly deposited into a Fidelity account after completing one financial coaching session.
The airline will then match up to $250 of an employee’s contributions made with payroll deductions to that account for a total of $1,000.
“Financial literacy is the civil rights issue of this generation,” said John Hope Bryant, chairman and CEO of Operation Hope, a nonprofit that worked in partnership with Delta and Fidelity Investments.
“It’s as important as the right to vote,” he said. “It’s the lifeblood to being able to operate a dignified life.”
The pandemic underscored how valuable these programs could be.
When the economy stalled, Delta workers tapped roughly $1 billion in hardship withdrawals from their retirement accounts, Bryant said.
“People were suffering quietly,” he said.
Delta recently expanded the initiative globally, making more than 90,000 employees eligible. So far, more than 33,000 workers are participating, according to the company.

“I didn’t have a strategy in place on how to save money,” said Loretta Day, a Delta flight attendant based in Atlanta. “If I got an email that said there was a sale on candles, it was disrespectful not to take advantage of the sale.”
But it didn’t take long for Day, 51, to practice better money habits once she completed a financial education class, she said.
“It made me think about everything I’m spending money on that I already have at home,” Day said.
Since then, Day paid off her credit card debt and has started putting one paycheck a month toward savings. She still buys the occasional candle, she said, but she has a bigger purchase in mind: Owning her own home.
“I’ve given myself a year,” she said. “I feel confident now that when I’m ready to retire, I’ll be in a better place than I was.”

“At the end of the day, we believe investing in our people is good for our customers and our shareholders,” said Kelley Elliott, vice president of Delta’s total rewards program.
Employees who are financially well are 10 times more likely to be focused at work than employees who are not, added Fidelity’s Taylor.
“There is a notable benefit to employers too,” she said.

‘Emergency savings is the new health insurance’

The ability to reduce financial stress and boost productivity will encourage many more companies to follow suit, according to Bryant.
“Financial literacy coaching and counseling tied to emergency savings is the new health insurance — this is what every company will be doing in the next decade,” he said.
With the additional support, workers “are going to come in earlier, stay longer and go the extra mile,” Bryant added. “It’s actually cheaper to treat your people better — that’s why it’s going to be sustainable.”

If your employer is offering you something akin to free money, take it.

Douglas Boneparth
president and founder of Bone Fide Wealth

“If your employer is offering you something akin to free money, take it,” said Douglas Boneparth, a certified financial planner and president and founder of Bone Fide Wealth, a wealth management firm based in New York. “That’s always going to be beneficial.”
“However, if it’s not being paired with an appropriate amount of discipline, it doesn’t matter,” added Boneparth, who is a member of CNBC’s FA Council.
Above all else, use this as an opportunity to make the most of the financial education being offered, he advised.
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The “summer of strikes” needs a new name — there is no sign of a slowdown in workers walking off the job.
Some 362,000 workers have gone on strike so far in 2023, compared with 36,600 over the same period two years ago.

Bloomberg | Bloomberg | Getty Images

The “summer of strikes” needs a new name — there is no sign of a slowdown in workers walking off the job.
Some 362,000 workers have gone on strike so far in 2023, compared with 36,600 over the same period two years ago, according to data by Johnnie Kallas, a Ph.D. candidate at Cornell University’s School of Industrial and Labor Relations, and the project director of the ILR Labor Action Tracker.

“We have found that many workers are increasingly frustrated with decadeslong rising income inequality,” Kallas said.
If the United Auto Workers’ work stoppages expand to include most, or all, of the 150,000 workers who could strike, “then 2023 could end up being the highest since 1986,” Kallas said.

Employees who withhold their labor can face a number of consequences, including losing their job and health insurance, experts said. As a result, they should learn what protections may be available to them.
“Strikes are a powerful tool for exercising power, but because our labor law is so weak it comes with great risk for workers,” Sharon Block, a professor at Harvard Law School and the executive director of the Center for Labor and a Just Economy, said in a previous interview with CNBC.
Here’s what to know.

Many, but not all, workers have the right to strike

The National Labor Relations Act of 1935 codified the right to strike into law. As a result, all workers covered by the NLRA can participate in lawful strikes, Block said.
What is a lawful strike?
The National Labor Relations Board defines two classes of lawful strikers: those protesting unfair labor practices at their workplace and those who are fighting its economic conditions.
“If workers are standing together in a strike for better wages and working conditions, they should feel confident that their strike is protected,” Block said.
That includes workers who are not in unions, she added, “as long as they act collectively.”

That last part is important.
“Strikes have to be ‘collective action’ to be protected,” Kenneth Dau-Schmidt, a law professor at Indiana University Bloomington, told CNBC earlier this year. “Generally, that means you have to do it as a group.”
Two people can constitute a group, he said, but “the larger, the better.”
Even then, there are exceptions.
Those in the private sector covered by the Railway Labor Act, which includes most railway and airline employees, are subject to that law rather than the NLRA.

“Workers covered by the Railway Labor Act are also allowed to strike, but there are many more obstacles and procedures for them to get through before they can strike,” Dau-Schmidt said.
“The RLA system is set up to facilitate mediation and presidential or congressional intervention before a strike, so big railway strikes are rare,” he added.
Most government employees are prohibited from striking in the U.S. Only a handful of states — about eight — have passed their own laws permitting certain public sector workers to strike.
Meanwhile, Dau-Schmidt said: “No state allows police or firefighters to strike.”

Job security at risk for strikers

Under the NLRA, workers can’t be fired or discriminated against for participating in a strike.
However, economic strikers can be permanently replaced if their employer hires someone else to do their job, Dau-Schmidt said. “Permanent replacement looks a lot like firing from the employees’ perspective,” he said.
If a striker’s replacement leaves the job for whatever reason, the worker who was on strike must be offered the position before anyone else is hired, though, Block said.

UPS reached a tentative agreement to renew a five-year labor contract with the Teamsters ahead of a July 31, 2023 deadline, averting a costly strike.
Bloomberg | Bloomberg | Getty Images

“Strikers just have to make an unconditional offer to return and wait for an opening,” she said.
If workers were on strike due to unfair labor practices, they may have a right to reinstatement, but that process, Dau-Schmidt said, “can often take a long time, and people often move on to other jobs.”
And employees “can never be sure their strike will be found to be an unfair labor practice strike,” he cautioned.

Pay and health insurance is ‘a real problem’

Workers who go on strike generally lose their wages, Dau-Schmidt said. “If you don’t work, you don’t get paid.”
Yet if the strike was over unfair labor practices, which was confirmed to be caused by violations of the law by their employer, they may qualify for back pay once the strike resolves, he added.

Strikes have to be ‘collective action’ to be protected. Generally, that means you have to do it as a group.

Kenneth Dau-Schmidt
law professor at Indiana University Bloomington

Economic strikers typically also get their other workplace benefits, including health insurance, nixed.
“Health insurance is a real problem,” Dau-Schmidt said. “Employers can suspend or end coverage.”
But, he said, “sometimes employers won’t kick employees off of the health insurance right away because it escalates the conflict and almost ensures an unhappy ending.”

Unemployment benefits for strikers

There is no federal law guaranteeing workers on strike jobless benefits. But two states — New York and New Jersey — provide some unemployment coverage to strikers.
There is also a bill working its way through the Massachusetts Legislature that would offer unemployment benefits to those who have been on strike over a labor dispute for 30 days or more. More

Regardless of the outcome, the United Auto Workers strike threatens to put pressure on already-high car prices.
Although anyone shopping for a new car won’t be immediately affected, expect discounting to decline and fewer incentives down the road, experts say.
For new cars, the average transaction price was $47,941 in August, near an all-time high, according to Edmunds.

Members of the United Auto Workers union hold a practice picket in front of Stellantis headquarters in Auburn Hills, Michigan, on Sept. 20, 2023.
Bill Pugliano | Getty Images

Regardless of the outcome, the United Auto Workers strike threatens to cause already-high car prices to escalate.
After the Big Three automakers — Ford, GM and Stellantis — failed to reach a deal on a new contract with the union, UAW-represented workers walked out of several assembly plants in Missouri, Michigan and Ohio, and warned it will strike additional plants at some, if not all, of the automakers at noon Friday.

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Up until this point, the strikes targeted only certain models, such as Ford’s midsize Ranger and the Jeep Gladiator, which are also not considered the best-selling vehicles, according to Ivan Drury, Edmunds’ director of insights.
“It’s a ‘chess not checkers’ mentality,” he said.
However, if the strike expands, or alternatively, if the striking autoworkers’ demands are met for a 40% pay raise along with other benefits, that could put pressure on automakers, dealers and, ultimately, car shoppers.
“It’s kind of a toss-up what’s going to happen,” Drury said.

Either way, consumers will pay more down the road, he added. “Inevitably yes, no matter what.”

Car shoppers won’t see an immediate effect

Buying a car was already expensive. Not only are new vehicle prices near an all-time high, but the interest rate to finance a purchase has also jumped dramatically.
For new cars, the average transaction price was $47,941 in August, near an all-time high, according to Edmunds.

For now, anyone shopping for a car won’t see an immediate effect from the strike, Drury said.
“There’s enough inventory on dealers’ lots,” he said.
Heading into the fall, vehicle supply had nearly stabilized, according to Cox Automotive, a source of auto industry information, although it is still low by historical standards.

The three automakers grew their inventories in August in anticipation of a potential standoff. They have about 50 to 60 days’ worth of inventory on hand, Cox Automotive said, up roughly 80% from a year ago.
This buffer may prevent dealers from feeling a significant effect, at least initially, according to separate data from Lotlinx, a dealership inventory management firm.

‘Dealers could see shortages within weeks’

In the longer term, “work stoppages ultimately lead to fewer vehicles built and lower inventory,” Cox Automotive Chief Economist Jonathan Smoke wrote in a blog post last week.
Discounts may decline as a result, depending on the model, Smoke noted.
“Ford only has 18 days’ supply of the popular Maverick pickup and 47 days of Broncos. Jeep only has 62 days of Grand Cherokees, and Chevy dealers are likely worried about their 28 days of Tahoes,” he wrote.
“If production of one of those products is disrupted, dealers could see shortages within weeks,” Smoke added.
With that in mind, consumers in the market for a car will likely find better deals now than later this fall.
“If you are thinking of making a purchase in October or November, you might as well do it now,” Drury said. With the added pressure from the strike, dealers are likely to pull back on incentives, including discounts on financing, he also noted.
“You are not going to find better deals later,” Drury explained.

Used car prices may be next to rise

Instead of getting a new car, buyers on a budget may find more value in purchasing a used car, experts often say. However, prices of wholesale used vehicles may have bottomed for the year, research shows.
“With potential new car production slowing, used car values have nowhere to go but up,” Drury said.
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Social Security benefits are at risk for a “crisis” of cuts in the next decade.
Here’s what lawmakers say now about addressing the program’s funding woes.

Ascentxmedia | Istock | Getty Images

WASHINGTON — Millions of Americans look forward to claiming Social Security retirement benefits after years of paying into the program.
But Social Security beneficiaries face the possibility of an across-the board benefit cut of at least 20% in the next decade, due to a looming funding shortfall the program faces.

That can be changed if Congress decides to act before the projected 2034 depletion date for the program’s combined funds.
“You cut that 20%, that’s a crisis,” said Tony Vola, 76, a Social Security beneficiary and member of the AARP Iowa Executive Council. Vola spoke on Thursday during a Social Security forum in Washington, D.C., held by AARP, a nonprofit group representing people ages 50 and up.
“We’ve done our part; it’s time for Congress to do their part,” Vola said.
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Social Security faces a shortfall between the income it receives through payroll taxes and the benefits it pays through monthly checks. The program’s trust funds help make up the difference.

But in the next decade those trust funds will dry up, projections show. Without that buffer, benefits would be immediately reduced.

Reform is unlikely before the presidential election

The headlines about the program’s funding woes may prompt Americans to suspect Congress is doing nothing to change the program’s situation.
Two top lawmakers who are working on Social Security reform proposals who spoke at AARP’s forum — Republican Sen. Bill Cassidy of Louisiana and Democratic Rep. John Larson of Connecticut — attributed the lack of action in part to stumbling blocks their proposals have met.
“It will not happen before the next presidential election, because President Biden has made it clear that he’s not going to act,” said Cassidy, who spoke first at the forum.

Republican Sen. Bill Cassidy of Louisiana speaks to the press on Capitol Hill on Feb. 10, 2021.
Nicholas Kamm | AFP | Getty Images

During his State of the Union address in February, Biden called for unanimity from both sides of the aisle to protect Social Security and Medicare.
But while Biden called out a proposal from Florida Republican Sen. Rick Scott that would sunset the program every five years, the president failed to mention a separate bipartisan plan he had been briefed on, said Cassidy, one of the lawmakers involved in that effort.
The White House did not immediately respond to a request for comment.
Meanwhile, Larson has put forward a bill, Social Security 2100, in four sessions of Congress to make benefits more generous. That enhancement would be paid for by increasing Social Security payroll taxes, as well as adding an additional net investment income tax, for taxpayers earning over $400,000.
The bill has had broad support among House Democrats, with 208 co-sponsors for a previous version of the proposal. Yet is has yet to make it to the House floor for a vote.
Recent hopes to advance the bill failed after Democrats worried Republicans would say they’re behind a massive tax increase, Larson said Thursday.
“People got nervous,” Larson said. “The bill was scheduled for a vote in the Ways and Means Committee and got pulled, much to my chagrin.”

How Social Security reform proposals would work

The two lawmakers’ proposals take different approaches to achieving long-term solvency to the program.
Cassidy wants to create a new Social Security fund by raising $1.5 trillion that would be invested in the stock market. This would be separate from Social Security’s existing trust funds, which are held in either cash or Treasury bonds.
The new fund would help the program keep up with inflation, which may run at 6% or 7% annually, while Treasury notes typically earn returns of just 1% to 4%, Cassidy said.
“All we’re doing is what every other 401(k), every other national pension plan does,” Cassidy said. “We invest in the strength of the economy as opposed to Treasuries, which are losing value every day.”
As the fund grows, it would ultimately address 70% of Social Security’s shortfall, Cassidy said. The remaining 30% would have to be resolved through bipartisan compromise.
Any changes to Social Security would require 60 votes in the Senate, and therefore would have to have agreement on from both parties.
Ultimately, that kind of compromise cannot happen without leadership from the top, according to Cassidy.
“We need a president to come up with the final language,” Cassidy said.

Rep. John Larson, D-Conn., speaks during an event to introduce legislation called the Social Security 2100 Act. which would increase increase benefits and strengthen the fund, on Capitol Hill on Jan. 30, 2019.
Mark Wilson | Getty Images News | Getty Images

Larson, who recently reintroduced his Social Security 2100 proposal, criticized one idea that has been floated to create study commissions to evaluate the program’s issues.
“There’s only two ways to go with this, you are either going to cut benefits or increase revenues,” Larson said. “You don’t need to study that.”
Larson’s bill would bring the minimum benefit up, which would lift 5 million people out of poverty, he said.
In addition, it would increase all benefits by 2% across the board, while also making benefits more generous for others including long-term beneficiaries, widows and widowers, and dependent children who are students.
The changes would be the first enhancements to Social Security in 52 years, according to Larson, who said he expects the next Democratic House speaker will make the proposal a priority.
In the meantime, it’s up to voters to put pressure on Congress to act, Larson said.
“Everybody wants to say how much they love Social Security,” Larson said. “You do? Where’s your bill? Where’s your proposal?”
Without action on Capitol Hill, Social Security beneficiaries are left wondering what could happen if benefits eventually do face a shortfall.
“If you take any cut away from any of us who are currently on Social Security, it will have a major effect on us, not just us, but our families,” said Alfred E. Mason, 83, who is the Louisiana state volunteer president at AARP. Mason began paying into the program in 1958 with his first job. More

“The best time to book is between Thursday and the second week of October, as prices are low and there are a lot of seats left to book,” said Hayley Berg, lead economist at Hopper.
Ticket prices are likely to rise after mid October and spike significantly each day in the last three weeks ahead of each holiday.
Weather and air traffic disruptions caused a lot of turmoil for holiday travelers last year.

Getty Images

‘Prices will start to rise after about Oct.14th’

Travelers are seeing cheaper flights this year. Domestic round-trip fares over Thanksgiving are averaging $268 per ticket, down 14% compared to last year. For Christmas, prices are about $400 round-trip, down 12% from last year, per Hopper data.
Ticket prices will go up as more travelers book their trips and flights come closer to selling out. While there may be some deals available through the end of October, don’t wait it out if you have set travel dates in mind between school or work.
“Prices will start to rise after about Oct. 14th for both Thanksgiving and Christmas trips,” Berg said. “Plan to book as soon as possible, as prices will rise each day as the holidays approach.”

Flight prices are likely to spike significantly each day in the last three weeks ahead of each holiday, Hopper anticipates.

Secure your flight and confirm your seating

Busakorn Pongparnit | Moment | Getty Images

Weather and air traffic disruptions caused a lot of turmoil for holiday travelers last year. Given the demand for holiday flights, it’s worth planning with the potential for such delays or cancellations in mind.
Fares will likely become increasingly competitive as travelers wait, “judging by the number of people traveling this year,” said Elizabeth Ayoola, a personal finance writer at NerdWallet. 
“Those determined to avoid the summer crowds and heat may be planning to travel during the holidays, driving prices up,” said Ayoola.
Holiday travel numbers are expected to resemble or surpass results from 2019, wrote Phil Dengler, co-founder and head of editorial and marketing of travel site The Vacationer.
Take one of the first flights of the day if possible. You’re two times more likely to be affected by flight delays or cancellations after 8:00 a.m., Berg said.
While nonstop flights are often more expensive, they can help travelers bypass the risk of missing connections due to a flight disruption.
Travelers might also look into travel insurance, and brushing up on your rights if your travel plans are interrupted.
Moreover, if you are not flexible on the specific flight you need to take, “ensure you have a seat on your desired flight,” Berg added.
While picking your seat can come at an additional cost with most airlines, it may serve as a peace of mind for travelers. More

If you’re making $80,000 per year, the thought of racking up $1 million for retirement might seem daunting. But with a little dedication and the right timing, it’s likely within reach — if you stick to a clear plan.
As a rule of thumb, most financial advisors suggest that you save 10% to 15% of your salary for retirement. But if your goal is to get to $1 million, the percentage you need to invest will vary drastically depending on how old you are when you start investing.

CNBC crunched the numbers, and we can tell you how much of your income you’ll want to tuck away if you make $80,000 per year. 
These numbers assume that you plan to retire at age 65 and have no money in savings now.
Financial advisors typically recommend the mix of investments in your portfolio shift gradually to become more conservative as you approach retirement. For investing, we assume an average annual 6% return. We don’t take into account inflation, taxes, pay increases or other savings-affecting factors life may throw your way, so make sure you plan accordingly. 
Watch the video above to learn how much you should be saving to reach your goal. More

The Consumer Financial Protection Bureau outlined its proposed rules to remove medical bills from credit reports.
The CFPB found that 58% of all third-party debt collection on consumer credit reports was for medical bills.
Credit reporting companies such as Equifax, TransUnion and Experian already limit some medical debt collection on credit reports.

The Consumer Financial Protection Bureau headquarters in Washington, D.C., on May 14, 2021.
Andrew Kelly | Reuters

The Biden administration wants to remove medical debt completely from consumer credit reports, so the Consumer Financial Protection Bureau on Thursday outlined its proposed rules to keep unpaid medical bills from affecting patient’s credit scores.
One in 5 Americans have medical debt on their credit reports, according to the CFPB. Medical debt can lead to a debt spiral for some consumers and narrow their options for housing, loans and credit cards.

“We know credit scores determine whether a person can have economic health and wealth,” said Vice President Kamala Harris. “Credit scores determine whether a person can buy a home, whether they can buy a car, rent an apartment, or own a small business.”

Medical debt is the most common debt in collection. The CFPB found that 58% of all third-party debt collection on consumer credit reports was for medical bills. The complexity of medical billing also makes it prone to errors. One study from the Medical Billing Advocates of America estimates up to 80% of medical bills have mistakes. 
“These bills, even ones where the patient doesn’t owe anything further, can end up being reported on the patient’s credit report,” said Rohit Chopra, director of the CFPB, “and millions of people have spent millions of hours disputing these errors, often while dealing with serious illness.”
The CFPB outlined proposals to prohibit consumer reporting companies such as Equifax, TransUnion and Experian from including medical debts and collection information on consumer credit reports. As of July 2022, the companies no longer include medical debt in collection under $500 on credit reports. New rules would make that voluntary approach mandatory and extend to all medical debt.

The agency also wants to stop creditors from relying on medical bills for underwriting decisions, to ensure that only non-medical information is used when considering a borrowers’ loan application.

Vantage Score no longer uses medical debt or medical collection in its credit score calculation, and newer FICO score models put less weight on that information. 
“If credit bureaus are pulling off much of this information already because it isn’t a good predictor of risk, why should creditors see your medical bills at all?” said Chopra. “And if creditors don’t need to see your medical-billing history, why are we continuing to allow debt collectors to use credit reports to pressure people into paying questionable bills at all?”
The rulemaking process takes time; CFPB officials expect to issue a formal rule sometime next year.
“It is unfortunate that the CFPB and the White House are not considering the hosts of consequences that will result if medical providers are singled out in their billing compared to other professions or industries,” Scott Purcell, CEO of debt collection industry group ACA International, said in a statement.
Sen. Elizabeth Warren, D-Mass., a vocal supporter of the CFPB, praised the announcement Thursday.
“Vice President Harris is leading the fight to lower costs for hardworking Americans by addressing the burden of medical debt,” Warren said. “No one should have their credit ruined because of a medical emergency. By proposing to erase medical debt from credit reports, the CFPB is doing what the consumer agency does best: saving Americans money.”
— CNBC’s Chelsey Cox contributed to this story. More