This IRM describes the installment agreement process. Specifically, IRM 5.14.9:

Purpose - This chapter provides procedures for approval and monitoring of installment agreements, including the level of approval authority necessary for different types of agreements. It provides procedures for providing the taxpayers with an independent administrative review when a revenue officer plans to reject a request for installment agreement. This chapter provides policy and procedures for providing taxpayer’s appeal rights on rejected requests for agreements, defaulted agreements, and terminated installment agreements.

Audience - These procedures and guidance apply to IRS Field Collection Revenue Officers and Group Managers.

Policy Owner- Director, Collection Policy, is the policy owner of this IRM.

Program Owner- Collection Policy, Case Resolution Alternatives, is the program owner of this IRM.
(6) Primary Stakeholders- The primary stakeholders affected or impacted by this IRM are:

7) Program Goals- Installment Agreements can be a viable case resolution for many delinquent accounts. By following the direction in this IRM section, employees can ensure installment agreements are approved when required, processed correctly, and that taxpayers will be granted the right to an independent review when the employee plans to reject an installment agreement. Employees also ensure that taxpayers receive appeal rights on all rejected requests for installment agreements.

Group Managers must approve most installment agreements. Specifically, installment agreements must be approved by managers when:

Group Managers have the authority to approve all installment agreements, including partial payment installment agreements secured in connection with CSED extensions. There is no dollar limit set for group manager approval of installment agreements. (See IRM 5.14.1.4.3, Notice of Federal Tax Lien and Installment Agreements, regarding no dollar limits and IRM 5.14.2.2, Collection Statute Expiration Date (CSED): Law, Policy and Procedures, on processing requirements with waivers.)

Submit installment agreements to managers for review and approval after all necessary case actions are taken, including thorough documentation of completed investigations and financial analysis (see IRM 5.14.1.4, Installment Agreement Acceptance and Rejection Determinations). Case histories must be noted that installment agreements are pending and TC 971 AC 043 was input, unless the agreement will be immediately approved (i.e. a streamlined or IBTF-Express IA). (See IRM 5.14.1.3, Identifying Pending, Approved and Rejected Installment Agreement Proposals on IDRS). Inform taxpayers if approval of agreements is delayed. If managers do not approve installment agreements, refer to IRM 5.14.9.7 regarding Independent Administrative Review.

After investigation, analysis and necessary actions, immediately request managerial approval of installment agreements (or input of installment agreements for those cases that do not require managerial approval.) Installment agreement payments may not be accepted and posted as such unless installment agreements are approved. Do not monitor cases to ensure taxpayers make payments before submitting for approval. (See IRM 5.14.3.2, Setting Deadlines and Receiving Payments, regarding requesting payments.)

When installment agreements are approved by Collection Field function on taxpayers assigned to ACS, the ACS call-site should be contacted immediately and informed of the agreement. This requirement is in addition to the requirement to input TC 971 AC 043 and/or TC 971 AC 063.

Managers must approve all revisions or adjustments to current installment agreements unless the conditions of IRM 5.14.11.5(2), Considerations after Default or Termination, Including Reinstatement, are met. Cases meeting the criteria of IRM 5.14.11.5(2) require no managerial approval if taxpayers have not been in default of agreements in the prior 12 months.

If an existing installment agreement is modified, Collection Field function employees will prepare Form 4844, Request for Terminal Action, for IDRS input and attach it to the new Form 433-D, Installment Agreement, or Form 2159 , Payroll Deduction Agreement, and the CIS. If the only change is the due date, complete Form 4844, and submit it for approval and IDRS input. Regarding revised agreements, the CSEDs may not be extended on balances due included in old agreements. If new agreements are entered into, CSEDs may be extended on those balances due included in old agreements as well as on balance due periods that have not previously been included in an installment agreement. (See IRM 5.14.2.2), Collection Statute Expiration Date (CSED): Law, Policy and Procedures, and IRM 5.14.11.5(4) , Considerations after Default or Termination, Including Reinstatement.)

The Integrated Data Retrieval System (IDRS) is used to monitor most Installment agreements for timely payments on accounts, as well as to determine whether taxpayers remain in compliance with current filing and paying requirements. IDRS also monitors agreements based on the locator numbers recorded at the time agreements are input. (See IRM 5.14.1, Securing Installment Agreements, Exhibit 5.14.1–2).

Follow ICS on-screen and help screen instructions to ensure installment agreements are routed properly for IDRS monitoring.

Use IDRS to monitor installment agreements for IMF, out-of-business BMF, or in-business BMF modules in either notice or balance due status meeting these criteria:

Agreements should schedule the first payments to be at least 30 days after the date agreements are input (non-DDIAs). For DDIAs, schedule the first payment for at least 60 days from the date the IA is submitted for input. The expectation is that the DDIA should be input to Status 60 within 30-45 days. (See IRM 5.14.10, Payroll Deduction Agreements and Direct Debit Installment Agreements).

If a payment is received in the area office on an IDRS-monitored installment agreement, use Designated Payment Code (DPC) "99" on the posting document. Refer to Document 6209, IRS Processing Codes and Information, for information on the use of Designated Payment Codes.

Accounts are considered routine installment agreements when the type of debt does not meet the criteria for any other type of IA (Guaranteed, Streamlined, Direct Debit, Manually Monitored Installment Agreement (MMIA), In Business Trust Fund (IBTF) or IBTF-Express). In order to close BMF accounts as routine, all employment tax filing requirements must be closed.

The preferred method of closing a Routine IA is by choosing Option A on the ICS Installment Agreement menu. Choosing this method of closure allows the IA to be systemically uploaded from ICS to IDRS (Status 60).

After the Group Manager approves the IA, an ICS Print Manager Dialogue box provides the option of e-mail or immediate printing of the Form 433-D, Installment Agreement, and Letter 2850, ICS Installment Agreement Confirmation Letter. A systemic ICS history is created stating the IA was systemically uploaded to IDRS.

Generation of the acceptance letter and Form 3210, Document Transmittal, have not changed with the systemic upload process. You are still responsible for mailing Letter 2850, ICS Installment Agreement Confirmation Letter, to the taxpayer and power of attorney, if applicable.

Write "FILE COPY" in RED ink along the top of the Form 433-D, Installment Agreement, and place it in the closed case file. Send the closed case file to CCP on the Form 795-B, Closure / Document Transmittal, or a manually created Form 3210 to:

If a hard copy of the Form 433-D, Installment Agreement, was prepared and approved outside of ICS, select Option B under the Installment Agreement menu to close the case on ICS. Use the systemically generated Form 3210, Document Transmittal, to route the agreement form (Form 433-D, Installment Agreement) on top of the case file to CCP for input into IDRS at Mail Stop 5-E04.114.

Option B does not systemically generate an approval notification, Form 433-D, Installment Agreement, or the Letter 2850, ICS Installment Agreement Confirmation Letter. Create the Letter 2850, ICS Installment Agreement Confirmation Letter, from the Installment Agreement menu under the Templates Listing on ICS. It is your responsibility to mail the letter to the taxpayer and power of attorney, if applicable.

Certain assessments and agreements are not compatible with IDRS monitoring. The types of agreements listed below must be manually monitored in Centralized Case Processing to ensure compliance with the terms of agreements:

Status 60 is not input on manually monitored installment agreements. The modules will remain open on ICS and will be transferred to Centralized Case Processing for monitoring.

Select "MMIA — Centralized Case Processing" in either Option A or Option B on the ICS Installment Agreement menu. The preferable option is Option A. (See IRM 5.14.7.4.2, BMF Installment Agreements, Approval and Monitoring, for IBTF Cases.)

ICS Installment Agreement Option A is used when neither Form 433-D, Installment Agreement, has been prepared nor approved prior to submission of the agreement for approval on ICS. Approval by the group manager using ICS Installment Agreement Option A generates:

ICS Installment Agreement Option B should be used if a hard copy Form 433-D, Installment Agreement was prepared and approved outside of ICS. Option B does not generate the systemic information discussed in IRM 5.14.9.5(4)(b),(c) &(d). Use of Option B requires that the contact employee complete the following actions after managerial approval:

Use IRM 5.14.1, Securing Installment Agreements, Exhibit 5.14.1–2 to choose the appropriate Agreement Locator Number (ALN). ICS will automatically set the subcode to "901" and the location to "MMIA" .

Advise taxpayers that the Letter 3856, Monthly Reminder for Installment Agreement Payments, which includes a payment stub and envelope, will be mailed to them.

When posting payments to manually monitored installment payments, use DPC "10" on posting documents. This code is designed to allow accumulation of data on these non-IDRS monitored agreements. See Document 6209 for information regarding other designated payment code indicators.

Refer to IRM 5.4.11, CCP Installment Agreements, for CCP's monitoring procedures on MMIAs.

See IRM 5.4.11.7, Default and Termination Procedures, for procedures on defaulted and terminated manually monitored installment agreements.

If an installment agreement is granted while processing a courtesy investigation (OI) and transfer of the balance due account is accepted, process the installment agreement (Form 433-D, Installment Agreement or Form 2159,Payroll Deduction Agreement) per the instructions found in the applicable IRM 5.14 section based on the type of IA secured.

If transfer is not accepted, ensure the pending installment agreement indicator (TC 971 AC 043) is input to IDRS. Return the installment agreement form (Form 433-D, Installment Agreement or Form 2159, Payroll Deduction Agreement) to the initiator of the courtesy investigation for approval and processing.

In accordance with Internal Revenue Code sections 6159(g) and 7122(e) and the taxpayer’s right to challenge the IRS’s decision and be heard, taxpayers are entitled to an independent administrative review of proposed terminations of installment agreements or rejections of proposed installment agreement requests.

When planning to reject a request for an installment agreement:

If rejection is the next planned action, the following information should be provided to the Independent Administrative Reviewer (IAR). For current case routing instructions see http://mysbse.web.irs.gov/collection/ceaso/contacts/19409.aspx

The Independent Administrative Reviewer (IAR) will add the case to ICS no later than five business days after receipt.

The Independent Administrative Reviewer (IAR) reviews the decision to reject installment agreement requests independent of employees' and managers' opinions. The IAR must exercise independent judgment to determine if rejection of the installment agreement request is appropriate. The IAR should use problem solving and negotiation techniques and consider the taxpayer’s perspective when working toward case resolution.

In deciding to uphold or overturn a proposed rejection, the Independent Administrative Reviewer (IAR) should:

The Independent Administrative Reviewer (IAR) may:

The Independent Administrative Reviewer (IAR) will provide all reasons for concurring (or not concurring) with decisions to reject installment agreement requests in the remarks section of Form 12233, Request for Installment Agreement - Independent Review Prior to Rejection. Bear in mind that the basis for the rejection of an installment agreement request could be the subject of an immediate appeal or a future Collection Due Process hearing.

The Independent Administrative Reviewer (IAR) must sign and record the date that cases were reviewed on the review form. The IAR’s original signature must be on Form 12233,Request for Installment Agreement - Independent Review Prior to Rejection, and any attachment thereto. Independent administrative review will be completed and a determination made no later than 15 business days from opening the ICS OI.

The Independent Administrative Reviewer (IAR) may not substitute Form 5942, Reviewers Report - Technical Services Advisory, for Form 12233, Request for Installment Agreement - Independent Review Prior to Rejection. No other forms, or other history or narrative may be substituted for Form 12233, Request for Installment Agreement - Independent Review Prior to Rejection. If a longer narrative is required than space allows on Form 12233, Request for Installment Agreement - Independent Review Prior to Rejection, an attachment is allowed. For ICS users, entries in the case histories are appropriate, but history entries cannot be substituted for Form 12233. The Independent Administrative Reviewer's (IAR’s) history entries may be printed and attached to Form 12233, with a note on the Form 12233 stating: "See Attached" .

The disposition of the independent administrative review will be recorded on Form 12233, Request for Installment Agreement - Independent Review Prior to Rejection. If the Independent Administrative Reviewer (IAR) finds:

The revenue officer (or other contact employee) will take the actions directed by the Independent Administrative Reviewer (IAR), when a case is returned to the revenue officer (or other contact employee). If the IAR recommends acceptance of the agreement, this information should be relayed to the taxpayer, and the agreement should be processed.

If a decision to reject an installment agreement request is sustained by the Independent Administrative Reviewer (IAR):

In the event a proposed installment agreement is rejected and it is determined that the taxpayer made a good faith revision of the proposal and submitted the revision within 30 days of the date of the rejection, the installment agreement must be considered anew. The appeal period continues to run from the date of the original rejection, if the revised submission was not made in good faith.

The Independent Administrative Reviewer (IAR) will notify referring field or contact employees or functions through appropriate channels of the outcomes of the independent administrative review, so that the appropriate Transaction Code (TC) and Action Code (AC) may be input. See IRM 5.14.1, Securing Installment Agreements, Exhibit 5.14.1-1.

Review of SB/SE field cases will take place in Advisory.

Independent Administrative Reviewers (IAR’s) will also complete independent administrative reviews on balance due periods not included in CDP appeals (when other balance due periods for the same entity are being appealed under CDP).

If the taxpayer proposes an installment agreement as a collection alternative after requesting a Collection Due Process hearing (CDP) and rejection is planned, then the field employee will forward the CDP periods to Appeals under Collection Due Process (See IRM 5.1.9.3.3, Processing CDP and EH Requests). The independent administrative review for CDP periods is accomplished by approving and signing of Form 5402, Appeals Transmittal and Case Memo, by the Appeals Team Manager. This is also true if installment agreements are requested while cases are assigned to Appeals for other reasons. If there are periods in the installment agreement request that are not included in the CDP request, these periods will be sent for independent administrative review by Advisory in accordance with the procedures provided in IRM 5.14.9.7(14).

The only instances in which taxpayers are not afforded independent administrative review or given appeal rights after requesting an installment agreement are:

Along with a rejection of an installment agreement request, and in accordance with the taxpayer’s right to challenge an IRS decision in an independent forum, taxpayers must be immediately notified of their appeal rights. Taxpayers whose requests for installment agreements are rejected, as well as those whose installment agreements are in default or have been terminated, will follow the procedures in IRM 5.1.9.4, Collection Appeals Program (CAP). Taxpayers may appeal rejections, proposed terminations, and terminations within 30 days. The time frame to request these types of appeals cannot be extended. See IRM 5.1.9.4.2(7), Request for a CAP Appeal and IRM 5.14.11.7, Appeals of Defaulted and Terminated Agreements.

Allow at least fifteen additional days after the thirty day period in case the taxpayer mails a request for hearing regarding rejections, defaults, proposed terminations or terminations on the thirtieth day after any of these actions. However, if the taxpayer confirms that no hearing has been requested, there is no need to wait the additional fifteen days before issuing a levy, as long as all other requirements for levy have been met. See IRM 5.11.1, Notice of Levy - Background, Pre-Levy Actions, Restrictions on Levy & Post-Levy Actions.

If taxpayers' appeals are rejected, taxpayers must be informed of this. Other collection action may then be taken, provided 30 days have passed since the date of rejection or termination.

Input, or request input of, appropriate TC 971 reversals if Appeals rejects (i.e., does not sustain) the taxpayer's appeals.

See IRM 5.14.1, Securing Installment Agreements, Exhibit 5.14.1-1.

Taxpayers have the right to receive assistance from the Taxpayer Advocate Service (TAS) if they experience difficultly in resolving their problems with the IRS. Refer taxpayers to TAS when contact meets TAS criteria, (see IRM 13.1.7, Taxpayer Advocate Service (TAS) Case Criteria) or when you are unable to resolve the taxpayer's issues the same day. The definition of "same day" is within 24 hours. "Same day" cases include cases you can completely resolve in 24 hours, as well as cases in which you have taken steps within 24 hours to begin resolving the taxpayer's issue. Do not refer same day cases to TAS unless the taxpayer asks to be transferred to TAS and the case meets TAS criteria. Refer to IRM 13.1.7.4, Same-Day Resolution by Operations.

When making a TAS referral, use Form 911, Request for Taxpayer Advocate Service Assistance (and Application for Taxpayer Assistance Order), and forward to TAS in accordance with your local procedures.

31 United States Code 9701 – as implemented by Office of Management and Budget Circular A-25, section 6 – provides authority for the imposition of user fees. User fees are imposed for services pertaining to the entering into and monitoring of an installment agreement and the restructuring or reinstating of an installment agreement. See 26 CFR 300.1 and 300.2.

The purpose of installment agreement user fees is to recoup the cost of administering the installment agreement program.

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

Taxpayers meeting the established low-income criteria are identified systemically and the account systemically adjusted.

The customer can also file a Form 13844, Application for Reduced User Fee for Installment Agreements:

Completed Form 13844, Application for Reduced User Fee for Installment Agreements, should be sent to:

KCSC ACSS is responsible for manually determining whether taxpayers meet low-income status in response to information submitted on Form 13844, Application for Reduced User Fee for Installment Agreements.

If the taxpayer does not fall within low-income guidelines, deny his request and explain why he does not qualify. Send Letter 4213C, Reduced Installment Agreement User Fee Rejected, and document AMS with the reason for rejection. Updated low-income guidelines can be found at: https://aspe.hhs.gov/poverty-guidelines. Action 61 Guidelines concerning control & monitoring apply to these requests and require comments be added to AMS.

For agreements monitored in status 60, Masterfile generates:

User fee modules must be established on manually monitored installment agreements when they are received in Centralized Case Processing.

Request establishment of user fee modules from Centralized Case Processing for ATAT agreements that are monitored in groups.

The purpose of an IA User Fee is for the IRS to recover costs of the services with administering the IA program to taxpayers. United States Code 9701 – as interpreted by Office of Management and Budget Circular A-25 – provides authority for the imposition of user fees. User fees are imposed for services pertaining to the entering into and monitoring of an IA and the restructuring or reinstating of an IA. See 26 CFR. 300.1. Current User Fee Rates: