The IRS has the authority to enter into payment plans with taxpayers who owe back taxes. In a effort to streamline the processing of these agreements the IRS continues to test expanded criteria for taxpayers requesting installment agreements. The previous test period which expired September 30, 2017 has been extended one year through September 30, 2018.
During this time, more taxpayers will qualify to have their installment agreement request processed in a streamlined manner. The purpose of the testing is to determine whether the expansion of streamlined installment agreements makes it easier for taxpayers to resolve their back tax problems and increase IRS efficiency. Based on test results, the expanded criteria for streamlined processing of installment agreement requests may be made permanent.
Most taxpayers with a balance due of less than $25,000 already meet the requirements for a streamlined installment agreement and the IRS will set-up a payment plan without the need for a Collection Information Statement or the filing of a Notice of Federal Tax Lien.
IRS New Test Criteria – Payment Plans
The new test criteria will be applied to installment agreement requests submitted through the Automated Collection System (ACS), Automated Collection System Support and Compliance Services Collection Operations. The test will not apply to taxpayers accounts handled by Field Collection revenue officers or Taxpayer Assistance Center employees.
One expanded criterion being tested relates to the amount owed. Individual taxpayers with an assessed balance of tax, penalty and interest between $50,000 and $100,000 may request streamlined processing of their payment plans. This will occur if the taxpayers’ proposed monthly payment is the greater of their total assessed balance divided by 84, or the amount needed to fully pay the liability by the Collection Statute Expiration Date (CSED).
For individual taxpayers who have filed all required returns and have an assessed balance of tax, penalties and interest of $50,000 or less, the IRS will test new streamlined payment plan processing criteria as follows:
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PRIOR STREAMLINED CRITERIA |
NEW TEST CRITERIA |
| Payment Terms Up to 72 months or the number of months necessary to satisfy the liability in full by the CSED, whichever is less. |
Payment Terms This criteria is unchanged. |
| Collection Information Statement Verification of ability to pay required in event of an earlier default for assessed balances of $25,001 to $50,000. |
Collection Information Statement Not required. |
| Payment Method Direct debit payments or payroll deduction required for assessed balances of $25,001 to $50,000. |
Payment Method Direct debit payments or payroll deduction is preferred, but not required. |
| Notice of Federal Tax Lien Lien filing not required for assessed balances up to $25,000.Lien filing is not required for assessed balances of $25,001 – $50,000 with mandatory use of direct debit or payroll deduction agreement.Note: If taxpayer does not agree to direct debit or payroll deduction, then they do not qualify for Streamlined Installment Agreement over $25,000.. |
Notice of Federal Tax Lien No change in criteria for assessed balances up to $25,000.Lien filing is not required for assessed balances of $25,001 – $50,000 with the use of direct debit or payroll deduction agreement.Note: If taxpayer does not agree to direct debit or payroll deduction, they do qualify for Streamlined IA over $25,000, but a Notice of Federal Tax Lien may be filed. |
The above test criteria also applies to all out of business tax debts up to $25,000 and all out of business sole-proprietorship debts up to $50,000. For in-business taxpayers, test criteria apply to only to income tax debts up to $25,000.
The IRS will test new streamlined payment plan processing criteria for individual taxpayers who have filed all required returns and have an assessed balance of tax, penalties and interest between $50,001 and $100,000 as follows:
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PRIOR CRITERIA |
NEW TEST CRITERIA |
| None – Streamlined processing criteria does not apply to assessed balances of tax between $50,001 and $100,000.
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Payment Terms
Up to 84 months or the number of months necessary to full pay the liability by the CSED, whichever is less. Collection Information Statement Not required if the taxpayer agrees to make payment by direct debit or payroll deduction. Payment Method Direct debit payments or payroll deduction is not required; however, if one of these methods is not used, then a Collection Information Statement is required. Notice of Federal Tax Lien Determination is required. |
The test criteria above also applies to out of business sole-proprietorship tax debts between $50,001 and $100,000. For operating businesses with trust fund tax liabilities, the requirements for streamlined installment agreements has not changed. It is limited to debt of 25,000 or less that is paid over a period of no more than 24 months.
If you owe back taxes, a payment plan may be the answer to your IRS tax problems. Call us today at 866-550-7655 today for a FREE consultation and learn how you can resolve your back taxes.