Streamlined Installment Agreements – IRS expands qualifications for tax debt relief
What is a Streamlined installment agreement? – The Internal Revenue Service (“IRS”) officially announced a pilot program on September 21, 2016 that allows even more taxpayers to qualify for Streamlined Installment Agreements. This test will run through September 30, 2017.
This pilot project specifically addresses taxpayers with an IRS assessed balance of tax, interest and penalties between $50,001 and $100,000.
The IRS is now making it easier for taxpayers to enter into a payment plan for tax balances between these amounts by:
• expanding the number of months to 84 months from 72 months. The proposed monthly payment amount would be spread out over these number of months, taking into consideration the Collection Statute Expiration Date (“CSED”).
Generally, payment plans must be paid off before the collection statute expires, however, there are some exceptions. If you need longer than 84 months to pay off your tax debt, a detailed financial will need to be submitted.
Who can apply for a streamlined installment agreement for the IRS?
For example: Taxpayer owes $95,000 including interest and penalties for 2011 with a CSED of 05/25/2025. Under the expanded installment agreement criteria, the payment plan amount the IRS would require is $1,131 over 84 months. If the CSED was changed to 10/28/2022 for 2011, the required monthly payment amount would be $1,319 over 72 months.
• removing the requirement for detailed financials. Prior to this, taxpayers who owed more than $50,001 had to provide detail on all income, assets, expenses and liabilities to negotiate a payment plan found on IRS Form 433F or IRS Form 433A.
What conditions are there for applying for the streamlined installment agreement?
The following conditions apply when entering into the expanded installment agreement:
• for any taxpayer that owes more than $50,001, the IRS will pursue filing federal tax liens. To avoid the IRS filing a Notice of Federal Tax Lien, it is advantageous for the taxpayer to pay down the debt to $50,000 and get on direct debit to qualify for the old streamlined installment agreement program.
• taxpayers must agree to automatic direct debit payments or they will need to submit financial documentation to the IRS.
• this program does not apply to business tax debt.
• taxpayers must be current in filing tax returns before applying.
During this test, more taxpayers will qualify to have their installment agreement request processed in a streamlined manner. The streamlined process removes the requirement for managerial approval or a review of detailed finances. This allows for faster responses. Based on test results, the expanded criteria for streamlined processing of installment agreement requests may be made permanent.
The San Diego Tax Attorneys at Delia Law have many years of tax resolution experience and will competently represent you before the IRS and set up your IRS payment plan. Please call for a no-cost tax attorney consultation at (619) 639-3336.
We look forward to helping you.
This blog post on Streamlined installment agreements with the IRS is not intended as legal advice and should be considered general information only.