In a recent speech IRS Commissioner Doug Shulman stated that, “We have an obligation to work with taxpayers who are struggling to make ends meet, this new approach makes sense for taxpayers and for the nation’s tax system, and it’s part of a wider effort we have underway to help struggling taxpayers.”
Based on this you should expect better cooperation from IRS personnel whenever you are proposing a reasonable solution to a taxpayer’s problem. This also means more Appeals Division cases are on the horizon. Experience has shown that whenever the IRS makes a helpful policy change it takes time before it becomes part of the thinking of those on the front lines.
One of the policy changes involves installment agreements, which are one of your most used tools for taxpayers to catch up on back taxes.
Recently, the IRS announced that, effective immediately, the threshold for using an installment agreement without having to supply Form 433-A is now raised from $25,000 to $50,000. The IRS goal is to reduce the obstacles for smaller cases to request time to satisfy unpaid liabilities.
Liabilities of $50,000 or less may now be approved for a streamlined agreement that extends over a 72-month maximum versus the previous 60-month maximum.
The 433-A is still required for balances over $50,000, but taxpayers may still opt to pay their balance down to get down to the $50,000 threshold. In this instance, they could then apply for the new streamlined plan.
The installment agreement provides for a slightly reduced level of penalty and interest continues to accrue on any unpaid balance.
An additional condition to qualifying for the streamlined plan is the requirement for monthly direct debit payments. Taxpayers without bank accounts will need to open one to comply. This may be a challenge for some troubled taxpayers due to current stricter requirements by many banks.