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Section 3. Deadlines and Payments and Requests for Installment Agreements Made to Delay Collection

5.14.3 Deadlines and Payments and Requests for Installment Agreements Made to Delay Collection

5.14.3.1 Setting Deadlines and Receiving Payments
5.14.3.2 Installment Agreement Requests Made to Delay Collection Action

5.14.3.1 (07-12-2005)
Setting Deadlines and Receiving Payments

Acceptance of an installment agreement request cannot be conditioned on receipt of a series of payments requested (or pledged voluntarily) prior to the granting of an agreement. Therefore, failure to make a requested (or proposed) series of payments is not justification for recommending rejection of proposed installment agreements. Installment payments are required only after installment agreements are approved. A series of requested payments should not be substituted for an installment agreement if the facts of the case indicate an installment agreement is warranted.
The requests for payments discussed in this section will be made if:

based on analysis of financial information there is an ability to pay; and,
there is no planned resolution for the case; or,
there is a planned resolution, but no payments will result from that planned resolution until a later date; or,
the financial information received from third parties or taxpayers is incomplete or insufficient to determine a disposition for the case but sufficient information exists to request a series of payments; or,
the disposition of an asset or assets necessary to reduce the amount of liability subject to agreements will take time; or,
there is a necessity to verify financial information received thus far, and documentation or information has been requested from the taxpayer; or,
there is a necessity for the taxpayer to file tax return(s) prior to determining eligibility for an installment agreement or other resolution and time will elapse prior to the return filing; or,
the taxpayer plans to make payments or requests to make payments pending final disposition of the case.

Request a series of payments when one of the above situations exists if taxpayers are in "balance due" status, including when requests for installment agreements are pending (except when prohibited by stays of collection such as in bankruptcy) unless agreements can be granted immediately. When received, these payments are classified as requested payments, not installment payments.
If installment agreements are not pending, warn taxpayers of enforcement action if payments and/or other information, documentation or required returns are not received. (See IRM 5.14.3.1(8) regarding combining the request for payment with requests for other information or documentation.)
If a series of payments are not requested from (or required of) taxpayers in "balance due" status, they should be encouraged to make a voluntary payment (or payments) at any time, including when requests for installment agreements are pending (except when prohibited by stays of collection such as in bankruptcy.) When received, these payments are classified as voluntary payments, not installment payments.
Unlike installment agreement payments, requested payments may be designated by taxpayers. Unless designated, there is no particular designated payment code (DPC) for these payments.
If installment agreements are pending when requests for payments are made (or when taxpayers are notified they make voluntary payments) then advise taxpayers and document case histories that:

an installment agreement is pending;
the installment agreement must be approved (if applicable);
installment agreements are not granted until taxpayers receive confirmation in writing by issuance of a letter or a signed copy of Form 433D/2159; and
acceptance of voluntary or required payment(s) is not to be construed as acceptance of a requested installment agreement.
notification of either acceptance or rejection of an installment agreement request will be provided, prior to any enforcement action.
no levy action will be taken so long as a payment agreement request is pending.

If taxpayers request installment agreements, make payments (whether requested or voluntary) but are not provided the information specified in IRM 5.14.3.1(7), then their agreements are considered valid, even if:

there are unfiled returns;
financial information is not present (or not verified);
the payment amount is insufficient to fully pay the account(s); or,
later analysis of financial information shows an ability to fully pay or pay a larger monthly payment.

Note:

IRM 5.14.3.1(7) and IRM 5.14.3.1(8) do not apply if: upon review of a request, "pending" status is not identified; or, if "pending" status is identified, but taxpayers are notified rejection is the next planned action. See also "Example A" in IRM 5.14.3.1(16).

Caution:

If the information provided in IRM 5.14.3.1(7) is not provided to taxpayers and their agreements are considered valid, then the procedures provided in IRM 5.14.11 must be followed in default situations.
If payments are requested, this may be in connection with gaining other information, documentation or the request for required returns. (See IRM 5.14.1.5 and IRM 5.14.1.5.1.) Requests may be:

Verbal; or,
By use of Form 9297, "Summary of Taxpayer Contact" which may be mailed, hand delivered, or personally given to taxpayers.

The procedures described in this section may be used:

during any contact with taxpayers (if warranted);
after installment agreements are requested, i.e. while installment agreements are pending; or,
after termination of a prior installment agreement.

The procedures described in this section will not be used:

while installment agreements are in effect; or,
during the default period (prior to termination) of installment agreements (except for payments necessary to reinstate agreements.) (See IRM 5.14.11.4 and IRM 5.14.11.5 for applicable time periods.)

If action dates pass without receipt of payments and/or requested returns, (or documentation or information) and an installment agreement is not pending nor in effect (and all appropriate notices, CDP timeframes and other actions have been taken) appropriate collection action may be taken. (See also IRM 5.1.9 regarding CDP; IRM 5.11 regarding levies, IRM 5.8 regarding offers in compromise and IRM 5.10 regarding seizure and sale.)
If action dates pass without receipt of payments, and an installment agreement is pending, approval of the installment agreement should be considered on its merits, regardless of whether the series of payments was received. No collection action may be taken until after:

the request for an installment agreement is recommended for rejection;
an independent administrative reviewer agrees rejection should be conveyed to the taxpayer (see IRM 5.14.9.3);
rejection is conveyed to the taxpayer; and,
appropriate appeal timeframes (or appeals) have transpired (see IRM 5.14.9.4.)

Note:

Installment agreements are not considered pending if the direction provided in IRM 5.14.3.2 applies.

If payments are received as requested, but action dates pass without receipt of deposits or estimated tax payments or documentation or information, and an installment agreement is pending, inform the taxpayer that the installment agreement will be recommended for rejection based on non-receipt of requested items, then refer the case to the independent administrative reviewer recommending rejection.

No collection action may be taken (based on the reasons provided above) until after an independent administrative reviewer agrees rejection should be conveyed to the taxpayer (see IRM 5.14.9.3); rejection is conveyed to the taxpayer; and appropriate appeal timeframes (or appeals) have transpired (see IRM 5.14.9.4.)
After the actions described in IRM 5.14.3.1(14)(a), and if all other appropriate notices, CDP timeframes and other actions have been taken, appropriate collection action may be taken.

Installment agreements should be approved even if, while they are pending:

taxpayers miss periodic payment portion of deadlines (see above);

Note:

If taxpayers fail to make equity-based payments (like the one described in Example C below) rejection will be recommended. See also "Discussion of Above Examples" following the examples below.

all other deadlines and commitments are met; and,
all other requirements precedent to the granting of an installment agreement are met.

The following examples illustrate some situations where the procedures provided above should be followed:

Example A: Mr. A requests an installment agreement for $500 a month on a $150,000 liability and immediately begins making payments in that amount on a monthly basis. The agreement is not submitted for approval and is not approved. Mr. A is not informed the payments are voluntary (See IRM 5.14.3.1(5)). Mr. A is not required to make the payments by the revenue officer via Form 9297 (as described in IRM 5.14.3.1(9)). Mr. A is not informed the agreement is pending, nor of the necessity of approval. The revenue officer posts the payments made by Mr. A and begins monitoring the case solely for payments. Neither a financial statement review nor compliance check is completed. Several months later the revenue officer determines that several tax returns were not filed by Mr. A (prior to the request for the agreement) and Mr. A ’s financial statement shows he can pay $800 per month. In this case, the taxpayer’s installment agreement is considered valid. Rejection of the agreement is not appropriate because the taxpayer may believe an installment agreement is in effect (since not informed otherwise.) The agreement may not be terminated unless the criteria contained in IRM 5.14.11 apply.

Note:

The taxpayer is not advised of the criteria in IRM 5.14.3.1(7) so the Service must ensure the taxpayer’s rights, with regard to installment agreements, are preserved.

Example B: On March 21, 2003, Mr. B responds to appointment Letter 725(DO) and meets with the revenue officer (RO) regarding tax liabilities totaling $200,000 for two years, and unfiled tax returns for two other years. Form 433A is completed at the meeting. It indicates an ability to pay $5,000 per month but an installment agreement may not be appropriate because Mr. B has equity in property. The RO gives Mr. B Form 9297. Form 9297 provides dates by which Mr. B must take the following actions:
April 15: file tax return or extension with proof of payment for 2002.
April 22: make payment of $5,000 and file original, signed Forms 1040 for tax years ending 1999 and 2000.
May 21: provide copies of his last two months ’ bank statements, provide proof of two attempts to secure an equity loan on property, and make payment of $5000. The RO warns Mr. B of the consequence of missing any of the above deadlines, and informs him that the above deadlines for payment do not constitute an installment agreement. Mr. B states he will comply with the RO’s requests and leaves the office. The plan of action on this case is to review the responses from banks or finance companies on the loan applications and ensure the other requested information, including payments, are received when requested.

Note:

The taxpayer does not have a "pending" installment agreement and is given deadlines. If the deadlines are not met, appropriate enforcement action may begin, if all notices have been given.

Example C: This example is identical to Example B above except that prior to leaving the office, Mr. C requests an installment agreement in the amount of $5,000 per month. The RO informs Mr. C that the request will be considered, is contingent upon having filed all tax returns, and the timely filing of returns during the "pending" periods, borrowing on the equity in the property, and receipt of other information (see (b) above) and will be recommended for approval if the RO’ s requests are met including receipt of requested information, along with an amount determined to equal the equity in the property. She also informs Mr. C that the required payments of $5,000 per month must be made while the agreement request is being considered. She warns Mr. C of the consequences of non-receipt of requested payments and information, but also informs Mr. C that no levy action will be taken so long as an installment agreement request is pending and that Mr. C will receive notification of either acceptance or rejection of his installment agreement request prior to any enforcement action. All of the above is documented in the case history.

Note:

Although no enforcement action can be taken based on missed deadlines while installment agreements are pending or in effect, payments and other information are requested. If the taxpayer uses equity in assets to make a large payment, and provides requested information and returns, the installment agreement will be recommended for approval, even if the payments of $5,000 per month are not made. If the equity in property is not used to make a payment, or returns and/or information is not received, rejection of the installment agreement will be recommended. (The taxpayer was informed of this.) Collection action can be taken only after independent administrative review and appeals timeframes have elapsed.

Information related to "Setting Deadlines and Receiving Payments" is available in:

IRM 5.1.9 (regarding CDP);
IRM 5.11.1.3.9(4) (Notice of Levy);
IRM 5.8 (regarding Offers in Compromise); and,
IRM 5.10 (regarding Seizure and Sale.)

5.14.3.2 (07-12-2005)
Installment Agreement Requests Made to Delay Collection Action

If taxpayers request installment agreements that meet the criteria in this section:

requests will not be recognized;
no "pending" agreement is identified;
input of TC 971 AC 043 will not be requested nor completed; and,
since the agreement request is not valid, it is unnecessary to reject the request. Since it is not rejected an independent review is not appropriate, and appeal (CAP) of a rejection is not appropriate. Such appeals will not be accepted.

Note:

Taxpayers still have the right to meet with managers, request appeals of levy, or contact the Taxpayer Advocate. Also, if levies are issued after following the procedures provided in this section, although there is no appeal regarding the installment agreement, taxpayers have the right to discuss levies with managers, appeal levy actions or contact the Taxpayer Advocate. (See note in IRM 5.14.3.2(8).)

To identify whether requests are made to delay collection (or enforcement) action at least one of the following must apply:

There is no economic reality to the request (see IRM 5.14.3.2(3)(a)); or,
The request does not address changes requested in response to a prior request; (see IRM 5.14.3.2(3)(b)); or,
The request ignores direction provided by revenue officers (see IRM 5.14.3.2(3)(c)); or,
The request is made by a taxpayer that has defaulted prior installment agreements; (see IRM 5.14.3.2(3)(d)); or,
The request is made at a time that causes it to be classified as a request made to delay enforcement action (see IRM 5.14.3.2(3)(e)).

Note:

An installment agreement request that qualifies as a guaranteed installment agreement should be processed even if submitted solely to delay collection. (There is no exception in IRC 6159(c) for request made solely to delay collection.) However, per 26 C.F.R. 301.6331-4, the restriction against levy while an installment agreement is pending does not apply to installment agreements, including guaranteed installment agreements, submitted solely to delay collection.

As provided in IRM 5.14.3.2(1) and IRM 5.14.3.2(2), " pending" status will not be identified if:

there is no economic reality to the request. This applies if the proposed monthly payment amount is nominal (for example $1 per month) or so small it does not come close to reflecting the taxpayer ’s ability to pay or it is made without reference to ability to pay after such reference is requested.

Note:

If balance due accounts meet Guaranteed or Streamlined criteria – see IRM 5.14.5 – these agreements will be granted.

the request does not address changes requested in response to prior requests. If, after rejection of prior installment agreement request(s), taxpayers submit new requests that are not materially different from the prior request or requests, or do not address modifications (for example, taxpayers were provided acceptable monthly payment amounts), or do not address previously disallowed or undocumented expenses, then the (subsequent) request or requests do not result in identification of a pending installment agreement.
the request ignores direction provided by revenue officers . When revenue officers request that taxpayers: fully pay accounts (based on financial statement analysis; or submit documentation to support analysis of a financial statement, and this direction is not followed, and then the taxpayer requests an installment agreement, this is considered a delay action.

Note:

This does not apply if the taxpayer’ s request for an installment agreement precedes the revenue officer ’s request for an offer in compromise. See IRM 5.14.2.1(21) if the IA request precedes the request for submission of an OIC.

the request is made by a taxpayer that has defaulted prior installment agreements. If taxpayers request installment agreements after a default of a prior agreement the new agreement request will not result in identification of a "pending" agreement if: the ability to pay has not changed since default of the prior agreement; or the taxpayer has demonstrated a history of non-compliance with Federal Tax Deposit requirements, ES payment requirements, proper payroll withholding, or filing tax returns when due.
the request is made at a time that causes it to be classified as a request made to delay enforcement action: See IRM 5.11.1.3.9 regarding levies relative to pending and active installment agreements. See IRM 5.10 regarding Seizure and Sale. See the important note below regarding requests for agreements in the case of sale of property.

Note:

Installment agreement requests do not prohibit the sale of property that was seized before an agreement became pending. If a sale is scheduled, and a taxpayer subsequently requests an installment agreement then, even if the agreement is identified as "pending" , the sale may continue.

Examples of situations that do not result in identification of "pending" status:

Example A: The taxpayer previously requested an installment agreement for $700 per month and the request was rejected by the independent reviewer. The taxpayer was told when the rejection was communicated that an acceptable agreement would be $1000 per month. This amount was fully explained and also discussed with the group manager. The taxpayer now offers $900 per month, with no change in circumstances since the rejection. The subsequent request constitutes a delay action.
Example B: The taxpayer previously had a request for an installment agreement rejected. The case has proceeded to seizure and sale of the taxpayer’s assets. At the sale, five months after the rejection of proposed installment agreement, the taxpayer requests another installment agreement. The sale may continue. (See IRM 5.14.3.2(3)(e) and IRM 5.10 – Seizure and Sale.)

Note:

In this example, even if the request for an agreement does qualify for identification as a pending installment agreement, the sale may continue.

Example C: The taxpayer has the ability to fully pay the liability and there are no reasons why assets can not be used to fully pay taxes (see IRM 5.14.1.5 (6) and IRM 5.14.1.5(7)). The independent reviewer rejected a prior request based on the taxpayer’s ability to fully pay the liability. The taxpayer proposes another installment agreement amount. There is no change in taxpayer circumstances since the rejection. This subsequent request is considered to be one made in order to delay collection action. "Pending" status is not identified.

Document the case history regarding the facts that lead to the conclusion a request for an agreement does not warrant identification of a pending installment agreement.

Group managers must agree such requests were made to delay collection action.
Group managers must document case histories that they agree that the request was made to delay collection action.

Note:

Regarding IRM 5.14.3.2(3)(e), and IRM 5.14.3.2(5)(a) and (b), in situations where a sale of property is scheduled, even if an installment agreements is considered pending, the sale may continue. No managerial approval is required in this situation (beyond what is necessary to hold the sale.)

Inform taxpayers when their requests for agreement do not result in identification of a pending installment agreement. This may be relayed:

in person;
telephonically;
in writing; or,
by whatever other means of communication is customary or usual between the taxpayer and Service employee.

Enforcement action, including seizure and sale, may be taken without regard for the requests for installment agreements made to delay collection. (See IRM 5.11.1.3.9 and Exhibit 5.11.1–1 – Notices of Levy; IRM 5.10 – Seizure and Sale.)
It is important taxpayers receive the above notification before any levy is issued. If there is doubt about the legality of levy issuance or other enforcement action, consult Counsel.

Note:

If any pre-levy requirements have not been satisfied (see IRM 5.11.1.2), Counsel approval must be sought. (Also see note in IRM 5.14.3.2(1))

If the request for an installment agreement occurs during an Appeals process, Appeals must be notified that the request for installment agreement is deemed as a request made to delay collection.
If levies are issued on these cases ensure they are approved in accordance with IRM Exhibit 5.11.1–1, Delegation of Authority.
In the process of informing taxpayers that agreements have not been identified as pending, revenue officers and other contact employees may negotiate with taxpayers to arrive at an acceptable installment agreement amount or, based on dialogue with taxpayers, or additional information or documentation, determine that an installment agreement is pending.