-IRS Installment Agreements-
Levy, IRS Liens, IRS Garnishments; State of California Installment
Agreements, Levy, Liens and Garnishments - Solutions
IRS Installment Agreement – an option,
is it Right for You?
you aware that the IRS is failing to Properly Evaluate
Taxpayers’ Living Expenses and Is Placing Taxpayers in
Installment Agreements they cannot afford?
overall published default rates on I/As mask the economic
hardship for taxpayers who do not have enough income to support
payment of an IRS proposed installment agreement.
default rate on Partial Pay Installment Agreements is close to
28 percent, while the rate of default on Installment Agreements
worked by IRS field representatives is 26%, and the rate for
Automated Collection Services is a little over 20%. [See
Taxpayer Advocate 2016 Annual Report to Congress - here].
Taxpayer Advocate Report advises that nearly 300,000 taxpayers
“who should have qualified for currently not collectible (CNC)
status had entered into installment agreements in calendar year
2014 despite their income being below the IRS allowable living
expense (ALE) standards”.
point is that that the IRS is not conducting proper financial
analysis. This results in taxpayers entering into Installment
Agreements they cannot afford while the taxpayer suffers from
not being able to pay necessary living expenses.
is the cost to the taxpayer of setting up an installment
agreement which is merely going to default?
The default consequences to the taxpayer include:
- Not being able to obtain another
guaranteed IA (there are specific requirements to qualify) in
the subsequent five year period;
- Not being able to pay for
necessary living expenses;
- An additional user fee for
the taxpayer if the taxpayer requests a reinstatement of a
defaulted Installment Agreement;
Taxpayers may improperly lower current period withholding
in order to make payments on the older tax debt, and end up
owing more taxes and penalties, resulting in default of the
Installment Agreement; and
the mounting pressure cooker effect that the ever
“looming IRS cloud” isn’t going away, and that the
taxpayer has merely shifted an “old” IRS debt for a
“new” one, and has given the IRS an additional 10
years to collect on the “new” debt. Essentially, the
taxpayer has paid the “wrong” taxes due to pressure by the
Many Taxpayers agree to an
installment agreement they can’t afford because of outright
fear of the IRS. Historically, I have had taxpayers concerned
about suicide, and situations where children were under suicide
watch because of IRS tactics, intimidation and abuse. The
Taxpayer Advocate Report advises that “Nearly 300,000 taxpayer
accounts that should have qualified for currently not
collectible (CNC) status had entered into installment agreements
in calendar year 2014 despite their income being below the IRS
[Allowable Living Expenses].” By
definition taxpayers who cannot meet their necessary living
expenses are experiencing economic hardship. Release of levy
should be made, but the IRS will put these Taxpayers into an
installment agreement even though such payments cause economic
The goal of a payment plan
should be a plan that is “realistic for the taxpayer given the
taxpayer’s individual circumstances”. The
IRS many times ignores this requirement.
If an Installment Agreement is not the best solution,
then other alternatives should be explored, including an Offer
in Compromise, Currently Not Collectible, etc…
The plan should provide for strategies to ensure that
taxpayers come into compliance and remain compliant.
The Taxpayer Advocate report
concludes, in part, by stating:
“Taxpayers who enter into IAs they cannot afford risk
defaulting on the agreement and being subject to further
collection efforts. Alternatively, they may attempt to pay the
IRS at the expense of meeting their basic living needs. Further
compounding this problem are ALEs where the analysis leaves
major Household expenses up to the individual discretion of an
IRS employee and ALEs that are based on standard expenses that
do not reflect the reality of today’s society. Setting
taxpayers up to fail at compliance does not comport with
taxpayers’ rights, specifically the right to finality and the
right to a fair and just tax system. …”
above are among the many reasons why you should have a tax
professional represent you before the IRS.
for your TaxSOS free consultation today.
The above limited information is
intended for informational purposes only. If legal advice
or other expert assistance is required, the services of a
competent professional should be sought, and this general
information should not be relied upon without such professional