Alphabet Soup for Installment Agreements

This presentation covers installment agreements with the IRS as an alternative to enforced collection action. It covers various aspects of installment agreements, including the application process and specific types of agreements. Key Points: Alternatives to Enforced Collection: The IRS may defer payment for up to 120 days without supervisor approval if the taxpayer needs additional time to access funds. Suspension of Levy Action: Levy action is suspended by law if a rejected or terminated installment agreement is appealed within 30 days of notification of rejection. Automatic Acceptance: Statutory, Guaranteed, and Streamlined Agreements, including those under the “Fresh Start Program,” may be automatically accepted. Threshold for Financial Statement: As of March 2012, the threshold for using an installment agreement without submitting a financial statement was raised from $25,000 to $50,000. Living Expenses: The IRS will allow a minimum fair living amount, based on national and local standards, subtracting that amount from income to determine the installment payment. Special circumstances like medical needs may cause deviation from these standards. Immediate Payment: If an installment agreement is approved, the IRS officer will generally insist on an immediate payment of part of the outstanding liability, followed by equal monthly payments. Urgent Need for Assets: If the taxpayer can show an urgent need for assets and net cash flow, the IRS may allow him to keep all or some of it, if it would be inequitable to seize the asset or if the IRS will be better off allowing the taxpayer to retain more assets or cash flow than national standards indicate. Partial Payment Installment Agreements: These agreements can be used to reduce or settle a taxpayer’s final liability, but do not have the finality of an offer in compromise. It allows the taxpayer to pay part of the liability over time.