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IRS LOOSENS CRITERIA FOR STREAMLINED PROCESSING OF INSTALLMENT AGREEMENTS

IRS LOOSENS CRITERIA FOR STREAMLINED PROCESSING OF INSTALLMENT AGREEMENTS

IRS Website, “Streamlined Processing of Installment Agreements”

IRS has announced on its website that it is testing, through Sept. 30, 2017, expanded criteria for streamlined processing of taxpayer requests for installment agreements. In general, taxpayers who owe up to $100,000 in tax, penalties, and interest may experience accelerated processing of their request if their proposed monthly payment meets certain requirements.

Background on installment agreements. Code Sec. 6159 authorizes IRS to enter into written agreements with any taxpayer for the payment of tax in installments to the extent IRS determines that entering into the installment agreement will facilitate the full or partial collection of the tax.

IRS must enter into an installment agreement requested by an individual whose aggregate tax liability (without interest, penalties, additions to tax, and additional amounts) isn’t more than $10,000, and who satisfies certain other conditions set out in Code Sec. 6159(c)(2). The agreement must require full payment within three years, and the taxpayer must agree to comply with all Code provisions while it’s in effect.

There are also “streamlined” installment agreements, which benefit taxpayers because they may be processed quickly, without financial analysis or managerial approval. (IRM 5.14.5.1IRM 5.14.5.1) In general, IRS may accept streamlined installment agreements without requiring financial statements if the taxpayer owes no more than $50,000 in back taxes. The maximum term for a streamlined installment agreement is 72 months.

Expanded criteria for streamlined processing. IRS is currently testing expanded criteria for streamlined processing of taxpayer requests for installment agreements. The test is scheduled to run through Sept. 30, 2017.

During this test, more taxpayers will qualify to have their installment agreement request processed in a streamlined manner. Based on test results, the expanded criteria for streamlined processing of installment agreement requests may be made permanent.

During the test, expanded criteria for streamlined processing will be applied to installment agreement requests submitted to Small Business/Self-Employed (SB/SE) Campus Collection Operations, including the Automated Collection System (ACS). Expanded criteria will not be applied to installment agreement requests submitted to Wage & Income (W&I) Accounts Management, SB/SE Field Collection, or through the Online Payment Agreement application.

One expanded criterion being tested immediately is that individual taxpayers with an assessed balance of tax, penalty and interest between $50,000 and $100,000 may experience accelerated processing of their installment agreement request. This will occur if the taxpayers’ proposed monthly payment is the greater of:

  1. Their total assessed balance divided by 84; or
  2. The amount necessary to fully satisfy the liability by the Collection Statute Expiration Date.

References: For agreements for payment of tax in installments, see FTC 2d/FIN ¶ V-5010; United States Tax Reporter ¶ 61,594; TG ¶ 71904.