New IRS installment agreement procedures implemented.

• Author: Wenzel, Bob

Last year the IRS implemented several changes to the procedures for granting installment agreements. These revisions will result in better service to practitioners and their clients and in earlier resolution of most of the Service's unpaid individual accounts.

In an installment agreement, a taxpayer agrees to pay a balance due over a specified period. The IRS grants installment agreements when a taxpayer is unable to make an immediate full payment of the tax liability. Interest and penalties continue to accrue until the liability is paid. Therefore, taxpayers may want to consider other financial sources with lower rates before requesting an installment agreement.

The Taxpayer Bill of Rights codified the use of installment agreements in 1988. Over the last few years, the number of these agreements increased significantly. At the end of fiscal year 1992, more than 1.5 million taxpayers were using installment agreements to pay their tax bills.

This growth, coupled with the desire to look at the way the Service does business, led to a review of installment agreement procedures. Like private industry, the IRS must be willing to expand its operating practices to be more effective and efficient, and to best use its resources.

A national task force, comprised of representatives from various functions within the Service and a professional tax preparer, reviewed the procedures for installment agreements. The group looked for ways to reduce the number of contacts needed with the IRS to finalize an installment agreement by streamlining the process. The group also recommended changes to make sure that the long-term goal of the installment agreement was to improve the taxpayer's ability to voluntarily comply in the future. The procedural changes implemented include several recommendations of the group.

All functions within the Service now have the authority to grant installment agreements up to $10,000. Before this change, employees in the IRS Taxpayer Service activity had limited authority to grant installment agreements, but only Collection Division employees could work with accounts over $5,000. Now employees in Appeals, Employee Plans and Exempt Organizations, Examination, Problem Resolution, Returns Processing (in the service centers) and Taxpayer Service can help in resolving accounts.

This change means the IRS can respond to taxpayers who indicate at the time of filing their return, or at any point in processing that they are unable to pay their...