The IRS offers several types of installment agreements whereby taxpayers can pay delinquent income tax liabilities over time. Typically, installment agreements in excess of $50,000 require the taxpayer to provide a financial statement to the IRS and to negotiate the payment terms.
In 2016, the IRS tested a new type of installment agreement that allowed the taxpayer to obtain an installment agreement for tax liability up to $100,000, payable over 84 months, without providing a financial statement.[1] Previously, under the Streamlined Installment Agreement, the taxpayer was limited to a $50,000 balance. However, this new “expanded installment agreement” doubled the amount of tax that could be subject to an installment agreement without the taxpayer providing a financial statement. In 2018, the expanded installment agreement was made permanent. One downside is that the expanded installment agreement is only available through the IRS’ Automated Collection System (ACS). A taxpayer is not entitled to an expanded installment agreement through an IRS field office where an account has been placed for collection.
Now, the IRS has announced that the expanded installment agreement has been enlarged to $250,000. The enlarged expanded installment account was discussed by Darren Guillot, Deputy Commissioner for Collection and Operations Support in the Small Business/Self-Employed Division (SB/SE), on the Eric Green Podcast posted on July 26, 2020. The Internal Revenue Manual has not yet been updated to reflect the change, though the enlarged expanded installment agreement began on March 1, 2020. The enlarged expanded agreement is only available through ACS, and it is temporary, meaning the taxpayer should take advantage of it as soon as possible.
Taxpayers needing to resolve tax liabilities should contact a tax professional in order determine which installment agreement is best for their situation.
Jared M. Le Fevre is a Partner in the Tax, Trusts and Estates Practice Group of Crowley Fleck PLLP. Mr. Le Fevre represents taxpayers before the IRS, IRS Independent Office of Appeals, Tax Court, Federal District Court and state tax agencies throughout Montana, Wyoming, North Dakota, Idaho, and Utah. Mr. Le Fevre is involved in federal and state and local tax audits, appeals, and tax resolution throughout these western states. Mr. Le Fevre also advises clients on the tax effects of business and real estate transactions.
[1] IRM 5.(11)