Installment Agreement

Installment Agreement (IA)

All installment agreements are subject to a user fee. User fees for installment agreements are as follows:

1. $105 - nondirect installment agreements (Not set up on automatic deduction from your bank account)
   
2. $52 - direct debit installment agreements (Set up on automatic deduction from your bank account)
   
3. $45 - reinstatements
   
4. $43 - new agreements for taxpayers with income at or below certain U.S. Department of Health and Human Services poverty guidelines
   

Guarantee Installment Agreement

IRC 6159(c) requires to acept the taxpayer's proposal of an IA if the following conditions are met:

• The taxpayer is an individual and owes an income tax liability with an aggregate unpaid balance of assessment amount of $10,000 or less
• During the preceding five taxable years, the taxpayer (including their spouse if the requested IA is for a jointly file return, has not failed to file or to pay income taxes, nor entered an IA for payment of taxes)
• The IA provides for full payment of the liability within 3 years
• The taxpayer agrees to continue to comply with the tax laws and the terms of the agreement for the period (up to 3 years) then agreement is in place
• A Guaranteed Installment Agreement must be allowed even if it is determined the taxpayer is trying to delay collection

Streamline Agreement (SIA)

The IRS has raised the threshold for using an installment agreement without having to supply the IRS with a financial statement from $25,000 to $50,000 during the first part of 2012 (See IR-2012-31) This means that taxpayers who owe up to $50,000 in back taxes may enter into a streamlined agreement with the IRS that stretches the payment out over a series of months or years. The IRS also has raised the maximum term for streamlined installment agreements to 72 months from the preexisting 60-month maximum. 

A note of caution is to be aware penalties and interest will continue to accrue on the tax liability. A strategy I have used from time to time when a client owes greater than $50,000 and doesn't want to disclose or prepare a collection information statement is to make a partially payment. The partial payment is used to bring the balance below $50,000 to then qualify for a streamlined installment agreement. 

Non - Streamline Installment Agreement (NSIA) or Regular Installment Agreement

NSIA is considered when the taxpayer cannot qualify for a Streamline Installment Agreement. A complete financial statement must be completed to determine the monthly payment amount(s). The tax plus all accruals must be paid in full with in the CSED.

Partial Pay Installment Agreement (PPIA): 

If full payment cannot be secured by the CSED and the taxpayer has requested to make payments or has some ability to pay, a PPIA should be considered. PPIA's requires that equity in assets be addressed; taxpayers are required to use equity in assets to pay liabilities; however; complete utilization of equity is not always required as a condition of a PPIA. PPIA's require a Collection Information Statement and management review. All PPIA's are non-streamlined IA's; therefore require lien filing. The CSED is not extended by waiver. The American Jobs Creation Act of 2004 requires PPIA's be reviewed every two years. The review is conducted by the Centralized Case Processing organization.