Installment agreements are arrangements by which the Internal Revenue Service allows taxpayers to pay liabilities over time. 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 a Notice of Federal Tax Lien (NFTL). If full payment cannot be achieved by the Collection Statute Expiration Date, and taxpayers have some ability to pay, Partial Payment Installment Agreements may be granted. Generally, no levy may be made on the taxpayer’s property or rights to property while the IA is pending, for 30 days after the rejection of the IA, while the Office of Appeals is considering a timely rejection or termination, while an IA is in effect, and for 30 days after the termination of an IA. The IRS may levy on a non-taxpayer’s property encumbered with a federal tax lien, e.g. taxpayer gives a car encumbered to his cousin. IRS can levy on that car.

IRC 6159, Agreements for Payment of Tax Liability in Installments

IRC 6331(k), Levy and Distraint, No levy while certain offers pending or installment agreement pending or in effect

IRC 6672 , Failure to collect and pay over tax, or attempt to evade or defeat tax

The Director, Collection Policy is the executive responsible for the policies and procedures to be employed by collection personnel.

Field Collection group managers and territory managers are responsible for ensuring the guidance and procedures described in this IRM are complied with.

Program Reports:

Program Reviews:

Independent administrative review is required of all rejected installment agreement proposals, and all rejection, modification and termination decisions are subject to appeal procedures.

The Integrated Collection System (ICS) ensures that taxpayer conditions meet requirements for Streamlined or In-Business Express installment agreement processing criteria, that there are no unfiled returns, and that group manager approval is obtained for all non-streamlined installment agreements.

The Integrated Data Retrieval System (IDRS) programming requires that all open modules be included in an installment agreement for input to be successful.

Frequently used terms in this IRM along with their definitions include:

This table lists commonly used acronyms and their definitions:

IRM Resources:

Web Resources:

The Taxpayer Bill of Rights (TBOR) lists rights that already existed in the tax code, putting them in simple language and grouping them into 10 fundamental rights. Employees are responsible for being familiar with and acting in accord with taxpayer rights. See IRC 7803(a)(3), Execution of Duties in Accord with Taxpayer Rights. For additional information about the TBOR, see https://www.irs.gov/taxpayer-bill-of-rights

When employment tax liabilities of the owner of an LLC are assessed in the name and Employer Identification Number (EIN) of the LLC, special provisions apply. See IRM 5.1.21.10.1.

Ensure that the owner's name has been added to the assessment using the procedures outlined in IRM 5.1.21.6, and a new "LLC-Owner is Liable Address" record has been created in the Integrated Collection System (ICS) as described in IRM 5.1.21.8.2. Select the Name/Address record of the liable taxpayer when establishing the installment agreement on ICS.

To facilitate posting of installment agreement payments and avoid default notification to the wrong entity, a disclaimer may be added to the Additional Conditions/Terms section or as an attachment to the Form 433–D: "This agreement is between the Service and (single member/owner name). Payments will be accepted from (single member/owner name) or (name of disregarded entity), and will be applied to the liability assessed against (name of disregarded entity and its EIN). In the event of default, enforcement action will be taken against (single member/owner name)."

Voluntary payments may be accepted from the LLC, even when the owner is the liable taxpayer. Payments are applied to the EIN identified in the assessment.

When the owner of the LLC has no current depositing, filing or paying requirements because the liable taxpayer has changed, an installment agreement for tax periods where the owner is the liable taxpayer is not considered an in-business trust fund agreement.

Additional liabilities assessed in the name and EIN of the LLC for tax periods where the LLC is the liable taxpayer should not default an installment agreement for tax periods where the owner of the LLC is the liable taxpayer. Compliance for the current entity should be addressed separately.

Because of changes to Treasury Regulation 301.7701-2(c)(2)(iv), the LLC is the liable taxpayer for employment tax periods beginning on or after January 1, 2009 even when the LLC is otherwise disregarded for income tax purposes. For these taxpayers, it will be common to have assessments in the name and EIN of the LLC, where:

If the identity of the taxpayer changed from one period to the next resulting in a change of the taxpayer record, determine whether an installment agreement is the appropriate resolution for each liable taxpayer.

If an installment agreement is the appropriate case resolution for only one liable taxpayer, complete the action for the other liable taxpayer before submitting the installment agreement for processing. For example, if the SMO periods are to be placed in CNC status, take this action first before submitting the IA request.

Use Option B to submit the IA request to CCP for input. Make an ICS history notation in the Closing Narrative. This history notation will alert Centralized Case Processing (CCP) to exclude these modules from the IA. Use the systemically generated Form 3210 with the appropriate Mail Stop to route the case to CCP.

If an installment agreement is the appropriate case resolution for both the SMO and the LLC, a combined installment agreement may be secured.

Secure a separate Collection Information Statement (CIS) from each liable party.

The installment agreement payment is based on the combined payment ability demonstrated by the separate collection information statements from the SMO and LLC.

Address any applicable CSED and TFRP issues.

The following Option A, IA types allow for the submission of an SMO/LLC IBTF-IA:

ICS will block the creation of the IA until the following separate Name/Address records are created:

Input the appropriate TC 971 Action Code 364,365, 366 to identify the liable taxpayer for each module.

When requesting a combined IA on ICS, select the Name/Address record that includes BOTH the name of the LLC and the name of the SMO. This is normally the IDRS Mailing Address on ICS. If the Mailing Address does not contain BOTH the LLC and the SMO name, add a new address record using type Contact or Other.

Close the case on ICS by selecting Option A from the Installment Agreement Menu:

The approval request generated to the group manager will reflect a closure type identifying the IA as an SMO/LLC.

No SMO/LLC questions are presented when Option B is selected as the method of closure.

Once the Group Manager approves the IA, a systemic ICS history is created stating the IA was systemically uploaded to IDRS (Status 60).

A systemic history is generated that contains the SMO/LLC payment information and the statement, "Single Member Owner/LLC Installment Agreement – See Attachment" , which is populated in the Additional Conditions section of the Form 433D and in the Letter 2850.

After the Group Manager approves the IA, an ICS Print Manager Dialogue box provides the option of e-mail (to the initiating RO or Group Secretary) or immediate printing of the "Attachment to the SMO/LLC IA" along with the Form 433-D, Letter 2850, and the Form 3210.

Distribute the printed material as follows:

ICS will generate the following Subcodes and Location Codes for these types of agreements:

CCP will take the actions listed in IRM 5.4.11 for input and monitoring on these types of I/As which includes issuing separate default notices to the SMO and LLC.

Area management must ensure consideration is given to securing waivers to extend the statutory period for assessment from each responsible individual when the delinquent taxes will not be fully paid prior to the original ASED.

When soliciting waivers from responsible individuals, notify them of their right to refuse to extend the period of limitations, or to limit such extension to particular issues, or to a particular period of time. Taxpayers must be notified of their right of refusal each and every time they are requested to sign a waiver extending the period for assessment.

It should be fully explained to taxpayers that signature on a waiver, extending the TFRP period for assessment, will allow the Service to collect the delinquent and accrued taxes from the business through an installment agreement which extends beyond the original TFRP Assessment Statute Expiration Date (ASED).

ASEDs should be extended to the end-date of agreements, plus one year, to allow for skipped payments and interest rate changes. (Use CC ICOMP)

In general, do not request assessment of Trust Fund Recovery Penalties (TFRPs) if business taxpayers meet the terms of installment agreements. However, TFRPs must be considered on the potentially responsible persons of the business entity based on the following procedures.

If the agreement will not fully pay all balances due at least a year before the earliest Assessment Statute Expiration Date (ASED), then:

If potentially responsible persons have the ability to pay from current assets or income, request payments be made to reduce the trust fund portion of the liability. If they have the ability to make a significant payment or payments on the trust fund portion of liabilities, but do not make such payments (or do not make plans for payment from personal assets), consider recommending assessment of the TFRPs. If TFRPs are assessed on these cases, lien determinations should be made and, if appropriate, liens should be filed, and in most cases no other collection action should be taken during installment agreements.

Upon completion of the trust fund recovery penalty recommendation process on ATFR (Automated Trust Fund Recovery Application) complete Form 3210 to transmit the case to Control Point Monitoring (CPM).

If TFRPs are assessed, notify these taxpayers:

Trust Fund Recovery Penalty accounts and case files require SPECIAL HANDLING during in-business trust fund installment agreements.

If TFRP investigations are incomplete but all other actions and analysis necessary for granting installment agreements have been completed:

TFRPs must be considered and, if appropriate, assessed in connection with consideration of installment agreements for any out-of-business corporation or out-of-business LLC that is identified as the liable taxpayer.

Inform taxpayers installment agreements require approval.

Unapproved agreements may not be held to monitor compliance.

These cases will be monitored in Centralized Case Processing. Choose the appropriate closing action on ICS - "CCP (PSC) - IBTF - IA (NF Item in CCP)." Upon approval of the IBTF IA, ICS will close the balance due modules and systemically create an NF Item and reassign to CCP. These NF items will be monitored in CCP.

If you have a case that is an IBTFIA that is paid using the direct debit payment option, see IRM 5.14.10.5 for procedures.

Form 433D completion on ICS sends an approval notification to the manager under Option A only. No approval notification is sent to the manager under Installment Agreement Option B on ICS. You must forward the case file, along with the paper Form 433D, to the group manager for their approval and signature.

Once the Group Manager approves the IBTF-IA under Option A, an ICS history is created stating the IA was systemically uploaded to IDRS (Status 60). Generation of the acceptance letters and Forms 3210 have not changed. You are still responsible for mailing of the L2849 or L2850 to the taxpayer and power of attorney, if applicable, whether Option A or B is used.

Option A on ICS: Approval by the group manager using the ICS Installment Agreement Option A generates:

Use Option B only if hard copy (non-ICS) installment agreements are used and approved.

Option B generates only those items listed in IRM 5.14.7.4.2(7)(b), (e) and the subcode of "900" listed in (f).

After approval, revenue officers must ensure that taxpayers:

In-business trust fund installment agreements (IBTF-IA) input to IDRS Status 60 must be monitored in Centralized Case Processing. Forward approved agreements to Centralized Case Processing along with the unassessed Trust Fund Recovery Penalty administrative file, if one was prepared after taking the actions described above (See IRM 5.14.7.4.1 and IRM 5.14.9.4(5))).

In-business Trust Fund IA (IBTF-IA) case files will be submitted to CCP with the form 433-D on top, for monitoring. Write "IBTFIA for input and monitoring" in RED ink across the top of the form 433-D. The form 3210 is systemically generated on ICS with the following address:

Centralized Case Processing:

ICS will systemically close the balance due modules and assign an NF item to Centralized Case Processing. The assignment numbers for Centralized Case Processing are as follows:

Systemic transfer of accounts to Centralized Case Processing servers will occur when IBTF IAs are approved.

See IRM 5.14.7.4.2 and IRM 5.14.9.4(5) for ICS and assignment instructions.

After the revenue officer has closed the case with an In Business Trust Fund Agreement on ICS, a NF item is automatically opened for monitoring in Centralized Case Processing Support. See IRM 5.4.11 for details on the monitoring process.

The Centralized Case Processing employee will monitor the case monthly to ensure taxpayers:

If taxpayers remain in compliance with filing, paying and depositing requirements, no further case actions or contact is necessary, until the agreement is completed.

If the taxpayers do not complete any one of the items in IRM 5.14.7.4.3(4), refer to IRM 5.4.11 for the procedures CCP will follow.