Installment Agreements

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Installment Agreements
 

  • 5.14   Installment Agreements

    5.14.1   Securing Installment Agreements

    5.14.2   Collection Statute Expiration Date (CSED), and Installment Agreements on Specific Accounts

    5.14.3   Deadlines and Payments and Requests for Installment Agreements Made to Delay Collection

    5.14.4   Financial Reviews, Below Deferral Level Accounts, Innocent Spouse, Withdrawals and Multiple Entities

    5.14.5   Streamlined, Guaranteed and In-Business Trust Fund Express Installment Agreements and Extensions of Time to Pay

    5.14.6   Multi-functional Installment Agreement Authority

    5.14.7   BMF Installment Agreements

    5.14.8   Monitoring of Installment Agreements

    5.14.9   Approval, Independent Review, Appeals, and Disposition of Documents

    5.14.10   Payroll Deduction Agreements and Direct Debit Installment Agreements

    5.14.11   Defaulted Installment Agreements, Terminated Agreements and Appeals of: Proposed Terminations (Defaults), and Terminated Installment Agreements

    5.14.12   Monitoring Levy Payments — General

5.14.1.1  (09-30-2004)
Overview

  1. Installment Agreements are arrangements whereby the Internal Revenue Service allows taxpayers to pay liabilities over time. The only agreements that may be granted are those that provide for full payment of the accounts that are part of agreements. During the course of agreements, penalty and interest continue to accrue. No levies may be served during installment agreements.
  2. The terms "delinquent taxes," "accrued taxes," and "current taxes" are used in this manual. They are defined as follows:
    1. Delinquent Taxes: balance due, ACS balance due accounts and/or notice status accounts;
    2. Accrued Taxes: unassessed amounts due on returns or undeposited FTDs as of the date of contact; and,
    3. Current Taxes: FTDs and amounts which become due after the date of contact.

  3. Taxpayers should be encouraged to pay the liability in full to avoid the costs of an installment agreement which include a user fee, accrual of penalties and interest, and the possible filing of the Notice of Federal Tax Lien.
  4. In addition to the policies and procedures provided in sections 1 – 12 of this chapter, the following IRM chapters, sections and sub-sections provide procedures on installment agreements for specific functions within the Internal Revenue Service:
    • IRM 4.20 (Examination);
    • IRM 5.19.1.5.4 (Campuses, ACS, toll-free);
    • IRM 8.7.2 (Appeals); and,
    • IRM 13.1.7 (Advocate)

    Section 6 of this chapter titled Multi-functional Installment Agreements also contains guidance for other functions.

5.14.1.2  (09-30-2004)
Installment Agreements and Taxpayer Rights

  1. Prior to discussing taxpayers' ability to pay a liability, ensure they have received Publication 1: "Your Rights as a Taxpayer," and Publication 594: "What You Should Know About The IRS Collection Process."
  2. Request full payment of the tax liability. Encourage the taxpayer to pay off the tax liability as quickly as possible. If the taxpayer cannot pay the liability in full, encourage them to pay within 120 days (See IRM 5.14.5.5). If taxpayers are unable to pay in full, conduct interest-based interviews. (See IRM 5.14.1.5)
  3. Request some payment from the taxpayer. Taxpayers may be required to make a payment (see IRM 5.14.1.5(6)) or payments (see IRM 5.14.3.1) while securing documentation to determine the proper disposition of accounts.
  4. When taxpayers are unable to pay a liability in full, an installment agreement (IA) must be considered.
  5. Taxpayers with individual income tax liabilities of $10,000 or less (exclusive of penalties and interest) may be guaranteed an IA. Taxpayers with liabilities of $25,000 or less, may qualify for Streamlined Agreements. (See IRM 5.14.5.2 and IRM 5.14.5.3, Guaranteed and Streamlined Installment Agreements)
  6. There are various methods for making monthly installment agreement payments. The taxpayer must be encouraged to use one of the following electronic methods or credit card payments before accepting payment by check or money order:
    1. Electronic Federal Tax Payment System (EFTPS) – Taxpayers will select the "payment-due with IRS notice" payment type for posting to masterfile with a TC 670. EFTPS has the ability to schedule payments up to 12 months in advance for individual taxpayers and up to 4 months in advance for business taxpayers. The taxpayer must initiate payments by sending instructions to EFTPS. (See IRM 21.7.1.4.9 for complete instructions).
    2. Direct Debit installment agreements (if taxpayer maintains a checking account you must encourage them to take advantage of the direct debit installment agreement. (See IRM 5.14.10.4 for Direct Debit procedures.)
    3. Payroll deduction installment agreements (If the taxpayer will not agree to a direct debit installment agreement, you must encourage them to take advantage of the payroll deduction agreement.) (See IRM 5.14.10.2 for Payroll Deduction procedures.)
    4. Credit Card installment agreement payment. (See IRM 21.2.1.4.23.14.4 for procedures for paying by credit card.)
    5. Payment by check or money order. If payments are made by check, they should be written to: US Treasury. However, checks made out to "Internal Revenue Service" or "IRS" will be processed.

  7. Beginning January 1, 2000, certain taxpayers who enter installment agreements on timely filed returns will have failure to pay penalty reduced from a half to a quarter percent per month for any month in which an installment agreement is in effect. (IRM 5.14.1.3 describes necessary inputs for TC 971 action codes.) Input of TC 971 AC 063 reduces failure to pay penalty from one half (0.5) to one quarter (0.25) percent per month if all of the following conditions are met.
    1. the installment agreement was entered into on or after January 1, 2000;
    2. the balances are due from an individual (whether IMF or BMF, due on income, employment or excise tax returns);
    3. the tax return(s) were timely filed, including extensions; and,
    4. no CP 504, LT 11, or Letter 1058 was sent (indicated by a TC 971 AC 069), increasing the failure to pay penalty from one-half (0.5) to one (1) percent.

      Note:

      If agreements are terminated penalties increase to one-half (0.50) percent. Input of TC 971 AC 163 causes reversal of the reduction. (See IRM 5.14.11 regarding defaults and terminations.)

  8. See IRM 5.14.7.5(1)(a) — (d) regarding designation of payments during installment agreements.
  9. In discussing installment agreements, inform taxpayers:
    1. penalty and interest continue to accrue on unpaid liabilities. Provide taxpayers current percentage amounts and interest rates. If taxpayers request further information regarding penalty and interest the IRM 20.1, Chapter 2 provides rates for IRC 6651(a)(1) "failure to file" and IRC 6651(a)(2) "failure to pay" penalties in its sections: 2.3.1(2) and 2.4.1(2), respectively. IRM 20.2.15 provides interest rates, tables and computation information.
    2. there is an Installment Agreement User Fee (provide amount.) (See IRM 5.14.9.5.1 and IRM 5.19.1.5.4.3.);
    3. a lien may be filed (see IRM 5.14.1.5.2) and if a lien was previously filed, it remains on file;
    4. there is the possibility of a levy if the agreement is terminated;
    5. current returns for taxes must be filed and current deposits paid to qualify for an agreement (If applicable, remind the taxpayer of the obligation to make estimated tax payments in order to avoid accruing new tax liabilities which would default their agreement); and,
    6. federal tax refunds will be offset. (See IRM 5.14.1.5.1(19)(e))
    7. of the right to appeal proposed terminations of installment agreements, terminations of installment agreements and rejections of requests for installment agreements. (See IRM 5.14.9.4)

  10. In accordance with law, each year the IRS mails Computer Paragraph (CP) 89, "Annual Installment Agreement Statement, " to every installment agreement taxpayer. The statement provides:
    • the dollar amount of beginning account balance(s) due;
    • an itemized listing of payments;
    • an itemized listing of penalties, interest and other charges; and,
    • the dollar amount of ending account balance(s) due.

5.14.1.3  (09-30-2004)
Identifying Pending, Approved and Rejected Installment Agreement Proposals on IDRS

  1. Proposals to enter into installment agreements may result from letters, phone contacts, voice-mail, e-mail, or other communications between taxpayers and Service personnel. If proposals to enter into installment agreements are received by e-mail, do not respond in kind. E-mail responses are prohibited since they violate the IRS Security Policy. In addition, do not solicit e-mails from taxpayers regarding installment agreements, or other tax collection or examination issues. All taxpayers have the right to request installment agreements. Requests for installment agreements, including those on unassessed modules, will be noted in the case history, and must be identified on IDRS within 24 hours.
  2. The following transaction codes (TC) and Action Codes (AC) will be used:
    • Pending Agreements: TC 971 AC 043 — for requests not immediately approved; and,
    • Approved Agreements: TC 971 AC 063 — for immediately approved requests.

  3. As noted above, these inputs must be made within 24 hours of the request for, and identification of, installment agreements or pending agreements. These codes prevent levy issuance. (See IRM 5.14.1.6 — Levy Restrictions During Installment Agreements.) Area offices will designate officials responsible for inputs in Case Processing Support, or at the group, team, or unit level. (See Exhibit 5.14.1–1 — Input of TC 971, Action Codes 043 & 063) Responsible functions must be available during core business hours to receive telephonic requests for input of TC 971, Action Codes 043 and 063.
  4. Taxpayers need to provide specific information for installment agreement requests to be processed. Also, if the information in (a) through (d) below is provided but it is determined the agreement request was made to delay collection action, accounts should not be identified as in pending installment agreement status. (See IRM 5.14.3.2) To identify accounts as "pending" installment agreements taxpayers must:
    1. Provide information sufficient to identify the taxpayer: generally, the taxpayers name and identification number. If a taxpayer furnishes her or his name, but no ID number, and the taxpayers identity can be determined, pending status should be identified.
    2. Identify the tax liability to be covered by the agreement;
    3. Propose a monthly or other periodic payment of aspecific amount.
    4. Be in compliance with filing requirements (see IRM 5.14.1.5.1).

  5. Requests that meet the criteria in IRM 5.14.1.3(4)(a) through (d) above will be identified as pending installment agreements even if taxpayers are not in compliance with:
    • estimated (ES) payment requirements; or,
    • federal tax deposit (FTD) requirements,

    unless the procedures in IRM 5.14.3.2 apply.

  6. If taxpayers do not provide all the information in IRM 5.14.1.3(4)(a) through (d) above, ask them for the missing information. For example, if no payment amount is specified, ask how much can be paid per month. A monthly payment amount must be specified for the account to be marked "pending" .
  7. Acceptance or rejection of proposed agreements is based on analysis of Collection Information Statements (see IRM 5.14.1.5)

    Exception:

    (1) If installment agreement requests are made to delay collection action see IRM 5.14.3.2.

     

    Exception:

    (2) Grant Streamlined, Guaranteed and In-Business Trust Fund Express installment agreements based on the criteria in IRM 5.14.5.

  8. The following transaction codes (TC) and Action Codes (AC) will be input on ALL taxpayer modules containing TC 971 AC 043 to indicate acceptance or rejection of proposed agreements:
    1. For Approved Agreements: request that TC 971 AC 063 be input to IDRS on ALL taxpayer modules.
    2. For Rejected Proposals: request reversal of TC 971 AC 043 forty-five (45) days after the rejection is communicated to the taxpayers, unless a timely appeal is received.
    3. For Appeals: during appeals, TC 971 AC 043 remains on all modules. If Appeals sustains rejections, input TC 972 AC 043 (if 30 days have passed) or 30 days after rejection is communicated to taxpayers. If Appeals grants installment agreements, follow the procedures above for approved agreements.

  9. To identify trust fund recovery penalties as pending or approved installment agreements, the balance due account must be:
    • assessed; or,
    • Form 2751 must be executed by the taxpayer; or,
    • the assessment must be recommended for the potentially responsible officer by approval of Form 4183 and signatures on Letter 1153.

  10. Examples of "Pending" and "No Pending (agreement)" are in IRM 5.14.1.5 and the two charts below.
    SITUATIONS THAT DO RESULT IN IDENTIFICATION OF PENDING INSTALLMENT AGREEMENTS

    Example:

    (1) A taxpayer calls the IRS, provides her name, social security number (SSN), identifies the outstanding liability (or balances due), is in compliance with all filing requirements, fits streamlined installment agreement criteria and states she wants to pay $500 per month.

    Example:

    (2) A revenue officer (RO) and taxpayer discuss the taxpayer's financial statement (which has the taxpayer's name and SSN on the form) on the phone. The taxpayer is in compliance with all filing requirements. The bal dues are specifically identified. The RO says the taxpayer needs to pay $1500 per month. The taxpayer says he will think about it. The revenue officer mails the taxpayer a 433D. TP changes the amount on 433D and mails it back.

    Note:

    Though in pending status, the agreement (and payment amount) must be approved, unless it is a Streamlined, Guaranteed or In-Business Trust Fund Express agreement. (See IRM 5.14.5.)

    Example:

    (3) A taxpayer wants to make payments. RO completes Collection Information Statement (CIS) including the taxpayer's name and SSN and tells the taxpayer $500 per month is appropriate. The taxpayer is in compliance with filing requirements. The taxpayer verbally agrees to the payment amount.

    SITUATIONS THAT DO NOT RESULT IN IDENTIFICATION OF PENDING INSTALLMENT AGREEMENTS

    Example:

    (1) A revenue officer evaluates a taxpayer's collection information statement. The taxpayer's name, social security number and balances due are all known and/or identified. The revenue officer informs the taxpayer that a $1500 per month installment agreement is appropriate. There is no response from the taxpayer.

    Example:

    (2) A revenue officer mails a 433D (with the taxpayer's name, SSN and bal dues listed) to a taxpayer. The 433D provides a payment amount based on an analysis of the taxpayer's CIS. No response is received by phone, FAX, e-mail or other means of communication. The TP does not respond with a "No" .

    Example:

    (3) A taxpayer who knows he owes taxes tells his employer to send $500 per month of his paycheck to the IRS. The taxpayer does not communicate with the IRS. The taxpayer's employer sends $500 per month referencing the taxpayer's SSN. (Note: if $500 per month is being received, contact should be attempted prior to taking collection action.)

    Example:

    (4) A revenue officer begins a trust fund penalty (TFRP) investigation. Meanwhile, an officer of the corporation states he wants an installment agreement, identifies the trust fund portion of the corporation's liability (as the bal due account to be paid) and provides a specific payment amount (to be paid from his own funds and applied to the corporate liability – trust fund only.) However, no liability has been recommended for assessment and/or the officer has not signed Form 2751, indicating responsibility for the trust fund portion of the liability (i.e. there is no bal due account for payment application.) Therefore, the potentially responsible officer is informed there is no pending installment agreement and payments made are considered voluntary. Information about designating these payments to the trust fund portion of a liability is provided in IRM 5.7.4.4. (Also seeIRM 5.14.7.4.1.1 and IRM 5.14.7.5)

    Example:

    (5) A taxpayer wants to make payments on an installment agreement. The RO completes a Collection Information Statement (CIS) including the taxpayer's name and SSN. RO tells the taxpayer $500 per month appears to be an appropriate amount for an installment agreement but the taxpayer is not in compliance with filing his Form 1040 for the last two years. The taxpayer states that his accountant is away, and that the returns, which are extremely complicated, will take some time to prepare. The revenue officer requests that the taxpayer submit original, signed, returns, and provides a date 60 days hence, by which the returns must be received, along with a $500 payment (based on the financial statement received.) In addition, the revenue officer requests that a payment of $500 be received on a date 30 days hence. These requests are made in accordance with the procedures provided in IRM 5.14.3.1.

5.14.1.4  (09-30-2004)
Cases Received From ACS or Campuses

  1. In circumstances where cases are assigned to the field from ACS or Campuses with Transaction Code (TC) 971 Action Code (AC) 043 present on one or more of the tax modules, employees will:
    1. Attempt to contact the taxpayer.
    2. If contact is made, determine if the taxpayer wants an installment agreement.
    3. If the taxpayer wants an installment agreement, follow the procedures in IRM 5.14.3.1, regarding requesting payments. Include a definite request for payment, if appropriate. Consider the contact date to be the new request date and begin case action. If rejection is planned, an independent review is required. If the TC 971 AC 043 has not been input on all Balance Due periods, request input immediately.
    4. If the taxpayer did not request an installment agreement, request reversal of the TC 971 AC 043 using TC 972 AC 043 with the same date of input.

  2. In some situations the criteria regarding installment agreements made to delay collection action may apply. In these cases, if the current date is within 30 days of the input date of the TC 971 AC 043, and it is clear one of the criteria provided in IRM 5.14.3.2 is present:
    1. Contact is necessary.
    2. Follow the procedures provided in IRM 5.14.3.1.
    3. Independent review is not necessary.
    4. Request input of TC 972 AC 043.
    5. Ensure case histories are documented with regard to the procedures provided in IRM 5.14.3.2.

5.14.1.5  (09-30-2004)
Interest Based Interviews: Installment Agreement Acceptance and Rejection Determinations

  1. Conduct an interest-based interview with balance due taxpayers. Interest based negotiation with taxpayers reduces the risk of misunderstanding. The purpose of the interview is to determine the best manner of resolving the taxpayer's balance due accounts and, if appropriate, delinquent returns. At the interview:
    1. Provide the taxpayer with Publications 1 and 594 (See IRM 5.14.1.2(1)) and request full payment. If the taxpayer is unable to fully pay the liability immediately, ask the taxpayer how much can be paid within 120 days, and request that amount. (See the procedures provided in IRM 5.14.5.5 regarding Extensions of Time to Pay.) If the liability will be fully paid within 120 days secure the following minimum information only on the financial statement: name and address of employer(s) (accounts receivables if sole proprietor or business); bank name and address, bank account number; full property address of all real property; and year, make, model and tag number of motor vehicles.

      Note:

      If additional time is given to an ACS taxpayer, inform the ACS call site immediately.

    2. If the taxpayer states that balance due accounts cannot be fully paid within 120 days, a full Collection Information Statement (CIS) must be completed to determine the taxpayer's ability to pay. (Refer to IRM 5.15.1.3.1, to determine allowable expenses.)

      Exception:

      If taxpayers are eligible for streamlined, guaranteed or in business Express agreements, financial statements are not required. (See IRM 5.14.5.2, IRM 5.14.5.3, or IRM 5.14.5.4)

    3. While completing financial statements, ensure taxpayers interests are considered. Allow taxpayers to explain reasons for expenses and other circumstances they believe impact their ability to pay. (See IRM 5.15.1.3)
       

  2. Based on the results of the interest based interview, determine a plan for resolving the balance due accounts. The plan should be based upon:
    • results of financial statement analysis; and,
    • other information and documentation provided by taxpayers.

  3. There are no minimum nor maximum dollar limits for the amount of a liability that may be included in an installment agreement. (However, see IRM 5.14.4.2(4) regarding $25 per month (or less) agreements. Unless such agreements are "guaranteed" (per IRM 5.14.5.3) payments will be used for current withholding.)
  4. If taxpayers are unable to fully or partially satisfy bal due accounts, and an installment agreement will fully satisfy the bal due accounts (or accounts included in agreements provided by IRM 5.14.2.2) then installment agreements should be considered.
  5. Installment agreements must reflect taxpayers' ability to pay on a monthly basis throughout the duration of agreements.
    1. If taxpayers do not agree to payment amounts, or to increases, inform them that these, and other issues (see IRM 5.14.1.5(6) through (9) below) may be discussed with the next level of management.
    2. Employees may choose to bring managers into discussions to assist in reaching agreements.
    3. If agreements cannot be recommended for approval, inform taxpayers their requests are pending, and rejection of the request will be recommended, and refer the case for independent administrative review.

  6. If taxpayers have the ability to fully or partiallysatisfy bal due accounts by:
    • using cash;
    • withdrawing cash from bank or other accounts;
    • borrowing on equity in real or personal property; or,
    • selling real or personal property, then:

     

    1. request full or partial payment (specify amount) be made on the bal due accounts.
    2. inform the taxpayer that the specific amount of payment requested is, based on conversion of assets (through borrowing or selling); or cash or other liquid assets (such as securities or money market accounts); or other analysis of the taxpayer's financial statement.
    3. inform taxpayers installment agreements will be recommended for rejection if there is sufficient equity or cash available to fully pay the taxes, and full payment is not received by a set date, or partially pay the taxes, and the partial payment requested is not received by a set date.

      Note:

      See IRM 5.14.3.1 about providing deadlines.

    4. Provide a specific deadline for payment. In addition, notify taxpayers of the consequences of missing the deadline. (See IRM 5.14.3.1 for additional information.)

     

    Example:

    If a taxpayer has the ability to pay $3,000 per month on a $200,000 liability, has a home valued at $400,000 with equity of $200,000, require that he attempt to borrow on the available equity in the home prior to granting an installment agreement. If the taxpayer does not attempt to borrow on the home he must be notified that, though the installment agreement request is pending, it will be recommended for rejection. If the taxpayer is able to get a home equity loan and the monies are used to pay taxes, the amount of the payment on the loan will be considered an allowable expense.

     

    Caution:

    Do not warn taxpayers of enforcement action if installment agreements are pending or in effect. See IRM 5.14.3.1 for additional information.

  7. Taxpayers do not qualify for installment agreements if bal due accounts can be fully or partially satisfied by liquidating assets, unless:
    • factors such as advanced age, ill-health, or other special circumstances, are determined to prevent the liquidation of the assets; and/or,
    • they qualify for guaranteed or streamlined or Express agreements. (See IRM 5.14.5)

  8. Installment agreements may be granted if taxpayers make payments on bal due accounts that reduce the unpaid balance(s) of assessments (UBAs) to amounts that fit streamlined, guaranteed or in business Express criteria.

    Example:

    If a taxpayer has equity in assets and cash that total $100,000 and owes $40,000 (UBA) in taxes, request full payment of the bal due accounts. If the taxpayer makes payments that reduce the UBA to $25,000 and requests a streamlined installment agreement, the agreement will be granted.

  9. If an analysis of the taxpayer's financial condition shows taxpayers cannot pay:
    • but they insist on installment agreements;
    • amounts proposed will fully pay the bal due account(s) within the collection statute (and waiver period if appropriate);
    • but the possibility remains that payments cannot be made;

    then prepare a backup Form 53 along with the installment agreement in case of eventual default and termination. (See Exhibit 5.14.1–2 and IRM 5.14.4.2.)

  10. If analysis of the taxpayer's financial condition shows a liability cannot be collected in full through an installment agreement, discuss the possibility of an offer in compromise with the taxpayer (See IRM 5.8.1 and IRM 5.14.2.2 regarding installment agreements on specific balance due accounts.)
  11. See IRM 5.14.9.3 regarding Independent Administrative Review if installment agreement requests are recommended for rejection.
  12. See IRM 5.11.1.2.2 and IRM 5.10.1.4(2) if taxpayers qualify for installment agreements or offers in compromise but:
    • do not submit or request one; or;
    • do not agree to an acceptable payment amount.

      Note:

      Also see IRM 5.14.2.1(21) and IRM 5.14.3.1.

     

    Reminder:

    Although the plan to reject may and should be relayed, actual rejection of proposed agreements must not be conveyed to taxpayers prior to independent administrative review, and enforcement action may not be taken while installment agreements are pending.

  13. For agreements that require no managerial approval see IRM 5.14.5.2, 5.14.5.3, and IRM 5.14.5.4 below. For agreements that require management approval see IRM 5.14.9.2.

5.14.1.5.1  (09-30-2004)
Compliance and Installment Agreements

  1. Filing and paying compliance must be considered prior to determining that the best manner of paying delinquent taxes is through an installment agreement.
  2. Ensure all balance due modules, including cross-referenced taxpayer identification numbers displayed on IDRS and Masterfile (use CFOL commands) are included in agreements. (See IRM 5.14.1.5.1(16) for necessary information and IRM 5.14.2.2 for exceptions.)
    1. Individuals that are in business as sole proprietors must be in compliance with both individual and business filing requirements to qualify for installment agreements.
    2. If sole proprietors have delinquent accounts on two or more taxpayer identification numbers (SSN and EIN) all bal due accounts must be included in one agreement. (See IRM 5.14.2.2 for exceptions and IRM 5.14.8.2 and IRM 5.14.8.3 for monitoring.)

  3. Liabilities for returns that were filed, but are not assessed, may be included in installment agreements. Use Installment Agreement Locator Number XX32 (See Exhibit 5.14.1–2) Ensure all account balances included in agreements will be fully paid prior to CSEDs plus allowable extensions. (See IRM 5.14.2.1(3)).
  4. Taxpayers must be in compliance with all filing requirements prior to approval of installment agreements.
  5. Do not grant installment agreements if taxpayers have not filed required returns. Do not identify requests for agreements as "pending" agreements if taxpayers have not filed required returns. (See IRM 5.14.1.3(4)(d).)
  6. A Del Ret is present when a delinquency investigation is established by input of Transaction Code (TC) 140. In some publications and procedures the term "Taxpayer Delinquency Investigation " (TDI) is used to describe Del Rets.
  7. If Del Ret status is not indicated for a tax period then, for the purpose of granting an installment agreement, no additional compliance check is required (except on tax returns due within the past sixteen months – see IRM 5.14.1.5.1(8) below).
  8. Prior to granting IAs, ensure that tax returns due within the past sixteen months were filed. If not filed, address compliance even if a Del Ret is not indicated using the procedures provided in IRM 5.14.1.5.1(11) below. This ensures compliance is addressed when Del Ret case creation has not yet occurred. Del Rets are created within sixteen months of due dates of returns.
  9. If Del Rets were resolved by one of the following methods, the closure is not considered evidence of compliance for the purposes of entering into an installment agreement:
    1. surveyed;
    2. shelved;
    3. unable to locate;
    4. referred to Exam or SFR (unless the assessment is pending or the case is assigned);

  10. If Del Rets were resolved by a closure listed in IRM 5.14.1.5.1(9)a – d above, but it is determined that they could have been closed as provided in IRM 5.14.1.5.1(12) below, then input (or request input of) appropriate transaction and closing codes. In these situations installment agreements may be granted when closing Del Rets.
  11. If an installment agreement is the appropriate case resolution, and there is an open Del Ret on another tax module(s); then the installment agreement may be granted when:
    1. Tax return(s) indicated as due are filed.
    2. Del Rets are resolved using the dispositions listed in IRM 5.14.1.5.1(12).
    3. Del Rets are resolved using the dispositions listed in IRM 5.14.1.5.1(13).

  12. Installment agreements may also be granted when the following closures are present:
    1. No return secured – little or no tax due (Policy Statement P-5-133);
    2. No return secured – taxpayer due refund.

  13. If taxpayers are not required to file returns, such modules should be closed using appropriate transaction and closing codes. The return closing codes that indicate filing compliance, or that filing is not required are contained in LEM 5.3. Also see Document 6209 Chapter 11 for definitions.
  14. If taxpayers are required to file returns and these returns are not filed, installment agreements cannot be granted or approved. For a list of closing codes for returns that are not indicators of filing compliance see LEM 5.3. Also see Document 6209 Chapter 11 for definitions.
  15. If delinquency investigations (del rets) were closed with a transaction code that does not indicate filing compliance, request that returns be filed within a reasonable timeframe.
  16. See IRM 5.1.11.4 for exceptions and guidance regarding the filing of returns.
  17. Compliance checks based on case information:
    1. Except in those situations described in IRM 5.14.1.5.1(7) and IRM 5.14.1.5.1(8) above, further compliance investigation is neither required nor prohibited, if Del Ret status is not indicated on IDRS. In addition, unless there is a Del Ret, no CFOL review (and no IRPTR review) is required.
    2. If further research is conducted, and there is an indication a return is due, then address filing compliance prior to granting installment agreements. Installment agreements may not be granted if it is determined taxpayers are liable for unfilled Bal Due returns. (P-5-133, refund return determinations and the dispositions provided in IRM 5.14.1.5.1(12) are permitted in these situations, if determined appropriate after further investigation.

  18. The compliance checks described in this section are conducted to determine eligibility for installment agreements after they are requested by taxpayers. If taxpayers do not file requested returns within provided timeframes (and the circumstances described in IRM 5.1.11.4 do not apply) requests for agreements will not be identified as pending (rejection and independent review are inapplicable) and agreements will not be granted.
  19. Analyze the current year’s anticipated tax liability. If it appears a taxpayer will have a balance due at the end of the current year, the accrued liability may be included in an agreement. Compliance with filing, paying estimated taxes, and federal tax deposits must be current from the date the installment agreement begins. Use Agreement Locator Number (ALN) XX32. (See Exhibit 5.14.1–2)
    1. If