Purpose: This section provides an overview of the installment agreement (IA), also referred to as a payment plan, process and the considerations for accepting or rejecting an IA request. Although a variety of topics are addressed, this section does not provide comprehensive guidance on all aspects. As you use this section, remain alert for references to related IRMs and internal resources, and consult them as needed to ensure the case action taken is procedurally correct, fully documented, and consistent with the facts of the case.

By following the guidance in this IRM, you will be able to:

Audience: These procedures and guidelines primarily apply to IRS Field Collection revenue officers and group managers.

Policy Owner: The Director, Collection Policy, is the policy owner of this IRM. Collection Policy operates within the Small Business/Self-Employed (SB/SE) Division, Collection.

Program Owner: Collection Policy, Case Resolution Alternatives (CRA), is the program owner of this IRM.

Primary Stakeholders:

Program Goals: IAs can be a viable case resolution for many delinquent accounts. By following the guidance in this IRM section, employees can protect taxpayer rights, properly identify and process pending IA requests, and make accurate acceptance and rejection determinations based on the facts and circumstances of each case. Employees must also ensure the government’s interest is protected, use the least intrusive collection action that is appropriate, and consider whether another case resolution alternative is more appropriate when an IA will not resolve the liability.

Request full payment or partial payment of the balance due when taxpayers have the means to pay from income or equity in assets. Encourage taxpayers to pay the tax liability as quickly as possible.

If taxpayers qualify for a Guaranteed Installment Agreement, Simple Payment Plan, or Simple Payment Plan (Business Trust Fund), and request that type of agreement, the request will be granted even if the taxpayers could pay the liability in full. (See IRM 5.14.5, Simple Payment Plans, Guaranteed Installment Agreements, and Simple Payment Plans (Business Trust Fund).

If taxpayers do not qualify for Guaranteed Installment Agreement, Simple Payment Plan, or Simple Payment Plan (Business Trust Fund) processing, secure a complete Collection Information Statement (CIS). See IRM 5.1.10.3.2, Initial Investigative Interview.

Taxpayers with aggregate individual income tax liabilities of $10,000 or less (excluding penalties, interest, and additions) may qualify for guaranteed IAs if all requirements are met. See IRM 5.14.5.3, Guaranteed Installment Agreements, for additional information. Taxpayers with an aggregate unpaid balance of assessment (the CC SUMRY balance) equal to $50,000 or less may qualify for Simple Payment Plans. The unpaid balance of assessment includes tax, assessed interest, and penalties. It does not include accrued interest and penalty. See IRM 5.14.5.2, Simple Payment Plans, for additional information.

There are various methods for making monthly payments.

Encourage taxpayers to use one of the following electronic or credit card methods of payment rather than check or money order:

Certain taxpayers who enter into IAs and file timely will have the failure to pay penalty reduced from a half to a quarter percent per month for any month in which an agreement is in effect until the 25% maximum aggregate rate is reached. (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:

See IRM 5.14.7.5, Payments on Trust Fund Accounts During Approved In-Business Trust Fund Installment Agreements, paragraph (1)(a) — (d), regarding designation of payments during IAs.

On February 9, 2018, the President signed into law the Bipartisan Budget Act (BBA) of 2018. The Act amended IRC 6159 to provide certain limitations to IA user fees. The Act’s amendments to IRC 6159 apply to IAs entered into on or after April 10, 2018.

The purpose of an IA user fee is for the IRS to recover the costs of administering the IA program. 31 United States Code (USC) 9701 - as interpreted by the Office of Management and Budget (OMB) Circular No. A-25 - provides the authority for the imposition of user fees. User fees are imposed for services pertaining to the entering into and the restructuring or reinstating of an installment agreement. See 26 CFR 300.1, Installment agreement fee and 26 CFR 300.2, Restructuring or reinstatement of installment agreement fee. Current User Fee Rates:

Individual taxpayers qualified as low-income (for purposes of the IA user fees) get a reduced fee of $43. This $43 low-income fee may be waived or reimbursed if certain conditions are met. The low-income fee of $43 may be charged to taxpayers based on the Reduced User Fee Indicator (RUFI) on Master File, as indicated by a RUFI>1. Advise taxpayers that if they are low-income, for IA user fee purposes, if their adjusted gross income (AGI), as reported on their most recently filed tax return, that is at or below 250 percent of the FHHSG, the user fee will be reduced. Advise taxpayers that if they feel that their AGI would qualify them for low-income status, they may apply using Form 13844, Application For Reduced User Fee For Installment Agreements, available at www.irs.gov or by phone at 1-800-829-3676. Low-income status for IA user fees applies only to individuals (not partnerships or corporations). Taxpayers will be informed of their right to apply for low-income status in the installment agreement acceptance letter. Inform taxpayers that Form 13844 must be submitted within 30 days of the date on the IA acceptance letter. The contact employee will not make the determination of whether taxpayers qualify for low-income status; that determination will be made when the Form 13844, Application For Reduced User Fee For Installment Agreements, is processed and validated. Once the IRS determines that taxpayers qualify as low-income, any amount of the fee collected in excess of $43 will be credited against taxpayers' Internal Revenue Code liabilities and thereby will reduce the amount of interest and penalties that might otherwise accrue.

When discussing IAs, inform taxpayers that:

In accordance with the law, each year the IRS mails Computer Paragraph CP 89 and CP 289, "Annual Installment Agreement Statement," to every IA taxpayer. The statement provides:

IRC 6502(a)(2)(A) provides that statutory periods for collection may be extended in connection with granting IAs. However, it is the policy of the IRS that CSED extensions are permitted only in conjunction with Partial Payment Installment Agreements (PPIAs) and only in certain situations. See IRM 5.14.2.2.3, Waiver Procedures for Partial Payment Installment Agreements.

Proposals to enter into IAs may result from letters, phone contacts, voicemail, email, or other communications between taxpayers and IRS personnel.

All taxpayers have the right to request IAs. Requests for IAs, including requests involving unassessed/pre-assessed modules, must be documented in ICS case history and, when the request meets pending IA criteria, identified on IDRS within 24 hours.

The following transaction codes (TC) and Action Codes (AC) will be used:

These inputs must be made within 24 hours of the request for, and identification of, IAs or pending agreements. These transaction codes prevent enforcement (levy) action for the duration of the pending status. See IRM 5.14.1.5, Levy Restrictions and Installment Agreements (Payment Plans). Request the appropriate inputs for the applicable periods using the ICS application by selecting the "COLLECTION ACTIVITIES" menu from the Case Summary screen; then selecting "INSTALLMENT AGREEMENT" ; and then selecting the proper code for input (either "GENERATE TC971/972 AC043" or "GENERATE TC971 AC063" ).

Use the table below to determine whether an IA request qualifies for pending IA status. The account qualifies for pending IA status only when the taxpayer provides all information identified in the table below.

Do not identify the account as pending IA in the situations below.

A request for an IA on post-petition liabilities is non-processable when a taxpayer is in bankruptcy. See IRM 5.9.4.20.1, IA Requests For Post-Petition Liabilities Submitted During Bankruptcy.

A request for an IA on liabilities contained in a pending or accepted OIC is non-processable. See IRM 5.19.1.3.5(13), For Other Account Issues Requiring Referrals or Redirect, and IRM 5.8.1, Offer in Compromise (OIC), Overview.

Requests that meet the criteria in IRM 5.14.1.3 (5) are identified as pending IA even if the taxpayer is not current with:

If a taxpayer does not provide all of the information required in IRM 5.14.1.3 (5), request the missing information. For example, if no payment amount is specified, ask how much can be paid per month. A specific monthly payment amount must be specified for the account to be marked "pending" . Advise the taxpayer that the IA will not be considered pending until the information is received to perfect the IA request, and explain the potential consequences for failing to meet the deadline for the actions necessary to perfect the IA request.

Acceptance or rejection of proposed agreements is based on analysis of Collection Information Statements. See IRM 5.14.1.4, Installment Agreement (Payment Plan) Acceptance and Rejection Determinations.

The following TCs and ACs will be input on ALL taxpayer modules containing TC 971 AC 043 to indicate acceptance or rejection of proposed agreements:

To identify trust fund recovery penalties as pending or approved IAs, the balance due account must have an:

Examples of "Pending" and "No Pending (agreement)" are in IRM 5.14.1.4, Installment Agreement (Payment Plan) Acceptance and Rejection Determinations, and the two charts below.

If taxpayers cannot immediately pay the balance due in full, and an IA will satisfy the liability or otherwise meets the criteria in IRM 5.14.2.2, Overview, consider an IA.

If the taxpayers do not qualify for Guaranteed Installment Agreements, Simple Payment Plans or Simple Payment Plans (Business Trust Fund), determine a plan for resolving the balance due accounts based on the Collection Information Statement (CIS) and supporting documentation provided by the taxpayer. See IRM 5.1.10.3.2, Initial Investigative Interview, and IRM 5.15.1, Financial Analysis Handbook.

There are no minimum or maximum dollar limits for the amount of a liability that may be included in an IA.

Generally, IAs should reflect taxpayers’ ability to pay on a monthly basis throughout the duration of agreements. Employees must:

If taxpayers have equity in assets that could be used to fully or substantially satisfy balance due accounts, explore the possibility of liquidating or borrowing against those assets as determined in guidance found in IRM 5.15.1.3, Analyzing Financial Information, unless:

Given the various options available for satisfying balance due accounts, consider:

A Simple Payment Plan or Simple Payment Plan (Business Trust Fund) may be granted when the taxpayer makes a payment on balance due accounts that reduces the unpaid balance(s) of assessments (UBAs) to an amount that fits the for the agreement type.

If an analysis of the taxpayer’s financial condition shows the taxpayer cannot pay but:

If analysis of the taxpayer’s financial condition shows a liability cannot be collected in full through an IA, discuss the PPIA, Offer in Compromise (OIC), or a CNC determination with the taxpayer. See IRM 5.8, Offer in Compromise, and IRM 5.14.2.2.1, Partial Payment Installment Agreement Requirements. If the taxpayer agrees with the alternative resolution of CNC or OIC, secure the taxpayer’s consent to withdraw the IA request in writing or verbally. Document the ICS case history with the taxpayer's agreement with the alternative resolution and request input of TC 972 AC 043. Refer to IRM 5.14.4.5, Withdrawal of Installment Agreement Requests.

See IRM 5.14.9.2, Proposal to Reject Installment Agreement to Independent Administrative Review, when an IA request will be recommended for rejection, and IRM 5.14.9.2.3, Cases Returned From Independent Administrative Review, for communicating rejection and appeal rights.

See IRM 5.14.9.2.3(4), Cases Returned From Independent Administrative Review, regarding consideration of revised proposals received during the rejection appeal period.

See IRM 5.11.1.3.2, Required Notices, and IRM 5.10.1.5.2, Alternative Methods of Collection, if the taxpayers qualify for IAs or OIC but:

For agreements that require no managerial approval, see IRM 5.14.5.2, Simple Payment Plans, IRM 5.14.5.3, Guaranteed Installment Agreements , and IRM 5.14.5.4, Simple Payment Plans (Business Trust Fund). For agreements that require management approval, see IRM 5.14.7.3, Installment Agreements Involving Limited Liability Companies, IRM 5.14.7.4.2, Approval and Monitoring, and IRM 5.14.13.2, Managerial Approval.

No levy may be made on taxpayer accounts:

Levies may be served during the periods described in IRM 5.14.1.5 (1) under the following circumstances:

If an IA is identified as pending and a levy is outstanding, it may be released, but it is not required that such levies be released. If an IA is approved, and there is a levy outstanding, it must be released unless the agreement provides otherwise. If an outstanding levy will remain in effect during an IA, document this in the "Additional Conditions" block of the agreement form. See IRM 5.11.1.4.8, Pending & Active Installment Agreements.

IRM 5.14, Installment Agreements, is primarily for use by Collection contact personnel. In addition, it is referenced by other functions for IA policy and procedures. This section provides cross-functional authority to grant IAs and references actions necessary in the IA process. Collection personnel should reference this section to learn about other functions’ IA authority and the types of assistance other functions may request.

The authority to grant IAs has been extended to other contact functions within the IRS to improve one-stop service, reduce taxpayer burden, encourage voluntary compliance and utilize resources more effectively. The functions are: Appeals, Tax Exempt and Government Entities, Examination, Taxpayer Advocate Service, Submission Processing, and Field Assistance.

Multi-functional IA authority is limited to certain types of accounts with an aggregate unpaid balance of assessments of ≡ ≡ ≡ ≡ ≡ or less.

The authority to grant a Short Term Payment Plan Within 180 days is based on the Campus Collection function and the dollar criteria for requesting payment agreements. These Short Term Payment Plans may be granted for up to 180 days (Field Collection employees do not have authority to grant a Short Term Payment Plan Within 180 days). See IRM 5.19.1.6.3, Short Term Payment Plan Within 180 Days, regarding instructions and IRM 5.19.1.2.6, Case Processing Authority Levels, for authority levels for SB/SE campus employees.

The multi-functional IA authority levels apply to assessed and pre-assessed accounts, including taxpayers who state an inability to pay when filing a return, whether on time or late.

If taxpayers do not qualify for guaranteed installment agreement, simple payment plan or simple payment plan (business trust fund) processing, a CIS is required. Financial analysis may be done by the function initiating the agreement if sufficient expertise exists. See IRM 5.15.1, Financial Analysis Handbook, regarding financial analysis.

Financial statements for cases that do not qualify for guaranteed installment agreement, simple payment plan, or simple payment plan (business trust fund) processing — require verification of income and expenses. Verification may be done by the function initiating the agreement if sufficient expertise exists. Research of local property records regarding real property, personal property, and motor vehicle ownership is not required.

See IRM 5.14.1.4.3 regarding NFTL filing. NFTL filings will be requested from the Collection function on Form 12636, Request for Filing or Refiling Notice of Federal Tax Lien.

If the function initiating the agreement is unable to conduct financial analysis or verification, assistance will be sought from Collection personnel, or the taxpayer will be referred to Collection. The function initiating the agreement may assist the taxpayer in completing the CIS before referring the taxpayer to Collection.

Upon identification of an IA request, document in the case file that the IA is "pending." , and ensure the criteria in IRM 5.14.1.3 are met before inputting the "pending" status.

If a CSED extension is appropriate, see IRM 5.14.2.3, Collection Statute Expiration Date (CSED): Law, Policy and Procedures.

IAs will be approved by the function that initiates the agreement, within that function’s authority. Completed forms will be routed as follows:

If an account does not fall within the multi-functional guidelines or a function is unable to grant an IA for any reason, assistance will be sought from the Collection function or the taxpayer will be referred to Collection.

If the proposed IA cannot be granted due to the taxpayer’s noncompliance with deposit or estimated tax payment requirements, failure to file required returns, or failure to provide information (within a reasonable deadline), follow IRM 5.14.9.2.1, Revenue Officer Responsibility, and IRM 5.14.9.3, Collection Appeals Program, as applicable, before referring the case to field revenue officer groups. See IRM 5.19.1.3.2.4, Revenue Officer (RO) Assignment.

Local procedures should be developed by SB/SE Area Collection functions to accommodate other functions seeking assistance. Collection is responsible for the administration of IAs.

Examination employees who receive an IA request from a taxpayer should follow the procedures in IRM 4.19.13.11, Taxpayer Replies, and IRM 4.20.1.4, Installment Agreements, for Examination Collectibility Procedures.