1. IRC 6502(a)(2)(A) provides that statutory periods for collection may be extended in connection with granting installment agreements.
2. Until its revision on December 21, 2000, Internal Revenue Code (IRC) 6331(k)(3) by reference to IRC 6331(i)(5) provided for suspension of the statutory period for collection for tax periods in installment agreements. Despite this statutory suspension, the Service, by policy, limited the length of installment agreements to the 10–year statutory collection period except when CSED waivers were secured.
3. On December 21, 2000, the Community Renewal Tax Relief Act of 2000 revised the Internal Revenue Code such that the statute of limitations for collection is no longer suspended during installment agreements.

1. Method (A) – Extend CSEDs on all modules to separate dates (for each module) up to one year past the latest CSED on the module, ensuring no CSED extension is longer than five years (plus one year as specified in IRM 5.14.2.1(6).) (See Exhibit 5.14.2–2.)
2. Method (B): Extend CSEDs to the same date for all modules, ensuring no CSED extension is longer than five years, plus one year. (See Exhibit 5.14.2–2.)
3. CC ICOMP does not work on MFT 55, NMF, Status 72, or accounts on which maximum failure to pay penalty has been assessed. For these types of accounts the Decision IA tool may be used. The Decision IA tool can be found on the SERP website at: http://serp.enterprise.irs.gov/databases/irm-sup.dr/e-acsg2.dr/index.html.

1. Notify taxpayers they have the right to refuse signature on waivers.
2. If an installment agreement request is being considered and a taxpayer refuses to sign a waiver, inform the taxpayer the request will be considered and recommended for rejection, then refer the case to the independent administrative reviewer.
3. Unless some other factor, such as an increased payment amount, allows for acceptance of agreements that will fully pay all accounts prior to the CSED, independent reviewers should concur with these rejection decisions.
4. Unless factors such as age or ill-health make full payment unlikely, taxpayers whose liabilities would all be fully paid with extended CSEDs should not be considered for offers in compromise or specific account installment agreements (see IRM 5.14.2.2).
5. See IRM 5.14.2.1(21) if the opposite condition exists: all the bal due accounts cannot be fully paid, even with CSED extensions.

1. If no other collection avenues exist, ask taxpayers to submit requests for offers in compromise or installment agreements (on specific balance due accounts, see IRM 5.14.2.2).
2. Inform taxpayers that agreements that do not fully pay accounts (included in the request) will be recommended for rejection. (See IRM 5.14.2.2.)
3. Refer requests that cannot be accepted because they do not fully pay accounts included in the request for independent administrative review.
4. Independent reviewers should reject requests for installment agreements that do not fully pay taxes included in agreements.
5. After independent review, convey rejections to taxpayers. Taxpayers may appeal these rejections through the Collection Appeals Program. (See IRM 5.14.9.4 below Collection Appeals Program.)
6. See IRM 5.14.3.2 if taxpayers: make second requests for agreements that will not fully pay taxes after similar requests were rejected; and do not submit OICs after they are requested to do so (and an installment agreement is not pending.)

1. the government's potential for eventually collecting more than would be collected if the taxpayer was granted an offer in compromise. In particular, consider potential future collection through refund offsets (offers in compromise provide for only one such refund) and that an offer in compromise is a permanent settlement for less than full payment of the tax that usually cannot be modified or terminated unless there is a default.
2. that an installment agreement is more flexible tool for collection than is an offer in compromise. Revisions in installment agreement monthly payment amounts are allowable and easily accomplished based on ability to pay determinations and without defaulting agreements.

1. First include the bal due account with the earliest CSED that can be fully paid.
2. If the bal due account with the earliest CSED cannot be fully paid prior to the CSED (plus an extension) skip to the bal due with the next earliest CSED. (See IRM 5.14.2.2(10) for disposition of skipped bal due accounts.)
3. After including the bal due account with the earliest CSED that can be fully paid, include other accounts if the taxpayer has further ability to pay them.
4. Choose all later accounts based on " earliest CSED" in connection with "can be fully paid" .

   Example:

   30–199512 is the earliest CSED, and can be fully paid. 30–199612 cannot be fully paid. Therefore, skip to 30–199712. If it can be fully paid include it in the agreement. If not, skip to the next tax period.

5. Using the method described in a – d above, continue to add accounts to the agreement until no further balance due periods are left that can be fully paid.
6. Exception to a – d above: Group managers may approve agreements that include periods that do not have the earliest CSEDs if it is in the government's interest. Examples of such cases include when the sum of the liability of other tax periods is greater than the sum of the liability of the earliest CSED tax periods; or when the collectibility of one of the other tax periods is in greater doubt.

1. Use CNC closing codes 24 through 32, for IMF accounts (based on the taxpayer's income — see IRM 5.16.1.2.9(4).) Based on these closing codes the CNCed bal dues (the bal dues not included in agreements) will be systemically reactivated based on income level and are subject to systemic State Income Tax Levy.

   Note:

   Closing codes (CCs) 24 through 32 are used to utilize their functions for follow-up reviews (if necessary) and subsequent requests for payment. See IRM 5.14.2.2(19). These accounts are not uncollectible due to hardship, however, if these agreements are terminated, do not issue levies that include bal dues that are currently in status 53 as a result of input of TC 530 CCs 24 through 32. Put bal dues reported uncollectible (in accordance with these procedures) in collection status prior to taking enforcement action and ensure all other appropriate pre-levy actions are taken. (See IRM 5.14.1.5(4) regarding levies in these situations.)

2. For BMF accounts, use closing code 13.

1. these installment agreements will be reviewed annually (see IRM 5.14.2.2(19)); and,
2. the IMF accounts reported uncollectible may be reissued (see IRM 5.14.2.2(20).)

1. Input the Installment Agreement (IA) on ICS (using either Option A or B) for Group Manager approval. Include all balance due accounts, including those that will be reported CNC.
2. If Option A is used, print the approved 433D; if Option B, print 433D and secure group manager approval.
3. Write: "Specific Balance Due Account Installment Agreement " (or SBDAIA) in bold red text at the top of the input document.
4. Prepare a paper Form 53 (not on ICS) to CNC the appropriate accounts that are not included in the installment agreement.
5. Transmit Form 433D and Form 53 to Case Processing for input as a package.

1. Input the installment agreement on all balance due accounts.
2. Input CNC on the balance due modules not included in the installment agreement.

1. Use of "Review Suppress Indicator 6" on the installment agreement form results in issuance of Letter 522. (Employees who monitor the Installment Agreement Account Listing (IAAL) in Campuses will be instructed to issue Letter 522 (L522) on accounts with "Review Suppress Indicator 6." )

   Note:

   Letters 522 will be issued only on installment agreements that do not fully pay all taxpayer accounts. There is currently no other use for Letters 522.

2. If taxpayers do not respond to Letters 522 status 26 (field – balance due) accounts will be generated and sent to Case Processing groups for review and possible assignment to field revenue officers. (See IRM 5.14.2.2(19)(c) (1) through (3) below for procedures.
3. If taxpayers do respond to Letters 522 and further analysis of financial statements is necessary, status 26 (field – balance due) accounts will be generated and sent to Case Processing groups for review and possible assignment to field revenue officers. In these cases, prior to transfer to field revenue officers, Case Processing will ensure the CP 522 was mailed to the taxpayer's last known address. Case Processing will contact the taxpayer by telephone and request a financial statement. If contact is not made, or a financial statement is not received, or information necessary to verify the financial statement is not received, plan to terminate the installment agreement and send the case to the field.

   Note:

   Transfer from Campuses to Case Processing Units is based on input of assignment information completed by Case Processing as described in IRM 5.14.2.2(18). Campuses will check "last T-Sign" for transfer information.

4. Upon field assignment, secure and analyze new financial statements.
5. At any time, either while the case is assigned to Case Processing or the field, if it is determined there is no change in the taxpayer's financial condition, report the appropriate accounts uncollectible using the proper closing code (See IRM 5.14.2.2(10)) and, if no longer in installment agreement status, reinstate agreements.
6. If taxpayer financial conditions are changed, consider including additional balance due accounts in agreements, or other necessary collection actions.
7. If the taxpayer's ability to pay has improved, use the letter provided in Exhibit 5.14.4–1 (below) to propose changes in the agreement.
8. If an installment agreement or other disposition is not appropriate, or not immediately appropriate, consider other collection alternatives prior to re-reporting accounts uncollectible, including taking the accounts into active inventory. (See IRM 5.14.3.1 – "Setting Deadlines and Receiving Payments" .)

1. IMF accounts reported uncollectible in accordance with the above procedures will be reissued as bal due modules when taxpayer incomes rise above the thresholds described in IRM 5.16.1.2.9(4).
2. Check for status 60 modules if the " Primary Issuance Code" for reissued accounts that were reported uncollectible is: "TPI" . The Balance Due Summary Screen on ICS shows this indicator. This indicator is used when accounts are reissued if closing codes 24 through 32 were used with transaction code 530.
3. Ensure installment agreements are not in default because of reissued accounts that were reported uncollectible.
4. In these cases, prior to transfer of cases to field revenue officers, Case Processing will take the actions described in IRM 5.14.2.2(18)(c)(2) through (3). Upon field assignment, revenue officers follow the procedures in IRM 5.14.2.2(18)(d) through (h).
5. At any time, either while the case is assigned to Case Processing or the field, if it is determined there is no change in the taxpayer's financial condition, re -report the appropriate accounts uncollectible using the proper closing code (See IRM 5.14.2.2(10)) and, if no longer in installment agreement status, reinstate agreements.
6. If appropriate, send OIs or bal dues to the field for follow-up and investigation.

1. Request a review cycle that is the earlier of 312 cycles (6 years) from the date of input (the maximum number of cycles that can be input), or the number of cycles necessary for the review cycle to coincide with the date the agreement will fully pay the taxes.
2. If accounts that were in status 60 are issued as a result of a CP 522, take the actions listed in (a) above (except for agreements on specific balance due accounts — see IRM 5.14.2.2) In addition, request reinstatement of status 60 and waive the user fee.

1. The liability includes the total amount outstanding, including accruals and currently not collectible accounts,
2. Equal monthly installments are required for IDRS monitoring; and,
3. there are no other bal dues.

1. request that the taxpayer adjust Form W–4 (following the procedures outlined in IRM 5.14.1.5.1(19)(a)) so the positive amount shown as being available for payments is instead used to increase current withholding; then,
2. follow the instructions in IRM 5.16 — Currently Not Collectible.

1. Taxes for two or more Form 1120S corporations if they share the same sole officer.
2. A sole proprietorship’s taxes (on the sole prop’s tax ID number) and the individual income taxes of the sole owner of the sole proprietorship.
3. Taxes for married couples, even if the taxes are owed individually.
4. A TFRP assessment on an officer of a corporation, and the corporation’s tax liabilities, if the corporation is out of business and only one officer had a TFRP assessed.

1. Ensure tax identification numbers are cross-referenced in order to ensure proper input. Campuses will input agreements on the entity with the earliest CSED first.
2. Both agreements must cross reference the related EIN or SSN using ALN (XX63). (This ensures the accounts appear on the Installment Agreement Account Listings in the correct category — terminal Operators: see IRM 2.4.30 for input instructions.)
3. The primary taxpayer identification number (TIN) will dictate the Campus to which the agreement will be routed for input. Primary SB/SE TINs will be routed to SB/SE Campuses. Primary W&I TINs will be routed to W&I Campuses for monitoring.
4. The Campus that inputs the agreement will ensure that ALN XX63 is input on both agreements, and the secondary TINs tax modules are input to IDRS status 63 and monitored at the same Campus.
5. Since the secondary agreement is monitored wherever the primary agreement is set up, this will sometimes result in SB/SE Campuses monitoring W&I cases and W&I Campuses monitoring SB/SE cases.

1. follow normal procedures to determine if the taxpayer qualifies for an installment agreement; see IRM 5.14.1.4.
2. If the taxpayer qualifies for an installment agreement make sure all bal due accounts are included, including those with TC 971 AC 065 and establish the installment agreement using Manually Monitored procedures in IRM 5.14.8.3.

1. follow normal procedures to determine if the taxpayer qualifies for an installment agreement and, include all modules (even the modules with the unreversed TC 971 AC 065) in calculating if the agreement will fully pay the liability prior to the Collection Statute Expiration Date (CSED).
2. If the taxpayer qualifies for an installment agreement include all modules except those with an unreversed TC 971 AC 065 in the agreement itself.
3. Establish the agreement using Manually Monitored procedures in IRM 5.14.8.3.
4. If, after such agreements are in effect, innocent spouse claims are denied, and the petitioning taxpayer requests addition of the bal due account(s) to installment agreements, request this on Form 4844.
5. Note on Form 4844 that the agreement for the case may now be monitored by IDRS if no other conditions exist that are mentioned in IRM 5.14.8.3.

1. reverse the TC 971 AC 065 using TC 972 AC 065;
2. input TC 971 AC 043 or AC 063;
3. re-input TC 971 AC 065 (after the pending or installment agreement code is on the tax module.)

1. if when, after financial analysis and a discussion with the taxpayer, it is determined the proposed payments may result in economic hardship; or,
2. when they inform the Service they want to withdraw an installment agreement request.

1. upon receipt of written requests for withdrawal; or,
2. 5 days after a verbal request for withdrawal.

1. Request input of Status 60.
2. Write "Suppress Default and Payment Reminder Notices," on the form.
3. Indicate the date of the month payments will be received.
4. Write the amount of the payments.
5. Indicate the frequency of payments.
6. Record the name, address and telephone number of the employer/third party levied.
7. Record the name, address and telephone number of the payor office (place from which payments are sent) if different than IRM 5.14.12.2(7)(f).
8. IMPORTANT: Write: "Input Installment Agreement Locator Number 0208" on the Form 4844.

   Note:

   Input of Installment Agreement Locator Number 0208 identifies these accounts as continuous wage levies on the Installment Agreement Account Listing (IAAL) in Campuses. Proper identification of these accounts may result in fewer field case issuances on defaults.

1. NMF accounts;
2. In Business Trust Fund accounts;
3. Levies which result in irregular payments;
4. Levies which result in payments of different amounts;
5. Levies on a spouse whose SSN is not the balance due account TIN;
6. If fewer than 18 months remain prior to the earliest CSED;
7. An unreversed TC 971 AC 065 is on a module (pending innocent spouse);
8. MFT 31 accounts; and,
9. Levies on seasonal employees, unless payments will satisfy the bal dues.

1. Assignment request: AOTOXX00. [See IRM 5.14.7.4.2.(15)];
2. Date payments will be received (monthly);
3. Amount that will be received (monthly);
4. Frequency of payments [i.e. monthly, bi-weekly (every two weeks) or weekly];
5. Name, address and phone number of levy source;
6. Name, address and telephone number of payor, if different than IRM 5.14.12.3(7)(e) (payroll services, accountants, other fiduciaries).

1. Attach a transmittal document or buckslip to the case with the following information:
   "CSED =_____" (insert date.) "No suit recommended."
2. Record information regarding the CSED in the case history.
3. Group Manager approval is required.

   Reminder:

   Group Manager approval is required. If there is no additional collection potential on the case, group managers should approve these transfers.

1. all bal dues are fully paid; or,
2. the last CSED is about to expire — release levies enough in advance to ensure no payments are received after CSEDs expire (also see IRM 5.14.12.3(13)); or,
3. one of the criteria listed in IRM 5.11.2.2 is met (such as the levy is creating economic hardship.)

1. If one or more CSED expires, but remaining bal dues included on the levy are within the statutory period for collection, do not release the levy.
2. Monitor levy payments until all bal dues included on levies are paid or the last CSED is about to expire (whichever is first.)
3. If some bal dues are fully paid, or the CSEDs expired and, as a result, the case now qualifies for systemic monitoring, follow the procedures in IRM 5.14.12.2. In this situation write on the face of the levy (688W/A)(if a copy is available): "The following period(s) have expired CSEDs:" (then list the appropriate bal due account periods.)

   Note:

   If a levy copy is unavailable record this information in the case history and ensure it also includes a list of the tax periods included on the original levy (and which tax periods have expired CSEDs.)

1. Continuous levy status cannot be reinstated;
2. Determine why the payments stopped;
3. If irregular payments are being received, then Manually Monitored procedures must be followed. (See IRM 5.14.12.3).
4. If payments have begun again and the issue that caused the stoppage is resolved, follow the procedures in IRM 5.14.12.2 or IRM 5.14.12.3.

   Note:

   No new levy (668A/W) is needed if the levy source is the same. Complete F4844, and state why no copy of the levy is provided. If a new levy is issued to the same source, see IRM 5.11.1.3.7, "Repeat Levies on the Same Source" .

5. Also input on Form 4844 the reason why the levy defaulted.

   Example:

   (entry for "Remarks" section of F4844:) "The taxpayer was ill for a month and this caused wages to be below exemption amounts."

6. If payors (levy sources) refuse to make payments, determine if issuance of Form 668C (Final Demand) is appropriate. (See IRM 5.11.2.1.9, Notices of Levy.)

INSTALLMENT AGREEMENT REGULATIONS

Proposed Amendments of Regulations (REG-100841-97) , published in the Federal Register on March 5, 2007.

[ Code Secs. 6159 and 6331]


Practice and procedure: Returns: Tax liability: Installment agreements. --
Reg. §301.6159-0 and amendments of Reg. §§301.6159-1 and §301.6331-4, relating to the payment of tax liabilities in installments, are proposed. Amendments of Reg. §301.6159-1, which were proposed on December 31, 1997, are withdrawn. Back references: ¶37,180DF, ¶37,180G and ¶38,186N.



AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Withdrawal of notice of proposed rulemaking and notice of proposed rulemaking.

SUMMARY: This document withdraws the notice of proposed rulemaking published in the Federal Register on December 31, 1997 (62 FR 68241) and contains proposed regulations relating to the payment of tax liabilities in installments. The proposed regulations reflect changes to the law made by the Taxpayer Bill of Rights II, the Internal Revenue Service Restructuring and Reform Act of 1998, and the American Jobs Creation Act of 2004.

DATES: Written or electronic comments and requests for a public hearing must be received by June 4, 2007.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-100841-97), room 5203, Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to: CC:PA:LPD:PR (REG-100841-97), Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue, NW., Washington, DC. Alternatively, taxpayers may submit comments electronically directly to the IRS Internet site at www.irs.gov/regs or via the Federal eRulemaking Portal at www.regulations.gov (indicate IRS and REG-100841-97).

FOR FURTHER INFORMATION CONTACT: Concerning the regulations, G. William Beard, (202) 622-3620; concerning submissions of comments or requests for a hearing, Kelly Banks, (202) 622-7180 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:



Background

On December 31, 1997, a notice of proposed rulemaking (REG-100841-97; 62 FR 68241) reflecting changes made to section 6159 of the Internal Revenue Code (Code) by section 202 of the Taxpayer Bill of Rights II, Public Law 104-168 (110 Stat. 1452, 1457) was published in the Federal Register . That proposed rule was not acted upon prior to the enactment of the Internal Revenue Service Restructuring and Reform Act of 1998 (RRA 1998), Public Law 105-206, section 3462 (112 Stat. 685, 764), which made further amendments to section 6159. Section 843 of the American Jobs Creation Act of 2004 (AJCA), Public Law 108-357 (118 Stat. 1418, 1600), also made changes to section 6159. This document amends the prior notice of proposed rulemaking. It contains proposed amendments to the Procedure and Administration Regulations (26 CFR part 301) under section 6159 reflecting the amendment of the Code by RRA 1998, the Taxpayer Bill of Rights II, and the AJCA.



Installment Agreements under Section 6159

Consistent with its mission of applying the tax laws with integrity and fairness to all, the IRS generally expects that all taxpayers will pay the total amount due, regardless of amount, at the time the Code requires that the tax be paid. See Policy Statement P-5-2, Collecting Principles (Approved February 17, 2000), reprinted at IRM 1.2.1.5.2. When attempting to resolve a tax delinquency, the IRS will work with taxpayers to achieve full payment of all tax, penalties, and interest. Where payment in full cannot immediately be achieved, the IRS may allow taxpayers to pay over time through installment agreements.



Explanation of Provisions

The proposed regulations allow the IRS to enter into agreements for the full or partial payment of any unpaid tax in installments. The regulations provide rules for the submission of proposed installment agreements, the processing, acceptance, and rejection of such agreements by the IRS, the termination or modification of existing agreements, and the appeal of rejections, modifications, and terminations to the IRS Office of Appeals (Appeals). The majority of these provisions are unchanged from what was contained in the prior regulations or reflect longstanding IRS administrative practice. The rules regarding when a proposed installment agreement becomes pending, restrictions on collection activity while an agreement is pending or in effect, and the suspension of the statute of limitations for collection are nearly identical to the provisions in existing §301.6331-4. The only change was a clarification that the IRS will not be precluded from filing suit or a proof of claim in bankruptcy for the full amount of the liabilities owed, regardless of whether the installment agreement provides for full or partial payment of the liabilities at issue.

Taxpayers may request administrative review of IRS decisions to modify or terminate installment agreements pursuant to section 6159(e), added to the Code by section 202 of the Taxpayer Bill of Rights II. Taxpayers may appeal rejections of proposed installment agreements under section 7122(d), added to the Code by section 3462 of RRA 1998. The proposed regulations allow taxpayers to appeal a termination, modification, or rejection of an installment agreement to Appeals provided they request the appeal in the manner specified by the IRS.

The previous notice of proposed rulemaking contained a more detailed procedure for seeking review of decisions to terminate or modify agreements. That proposed regulation has not been adopted. These regulations contain a less detailed procedure because procedures for appealing differ depending on the IRS operating division handling the case, the size of the tax liability, or the type of tax at issue. For example, some taxpayers may be able to request an appeal by telephone while others will be required to submit a formal written request. See Publication 1660, Collection Appeal Rights.

The proposed regulations incorporate the provisions of section 6159(c), added to the Code by section 3467 of RRA 1998. That section requires the IRS to accept a proposed installment agreement for income taxes under certain circumstances. The regulations also incorporate section 3506 of RRA 1998, which requires the IRS to send each taxpayer with an installment agreement an annual statement showing the balance due at the beginning of the year, the payments made during the year, and the remaining balance due at the end of the year.

Section 843 of the AJCA amended section 6159(a) to allow the IRS to enter into installment agreements that provide for partial (as well as full) payment of a tax liability. The proposed regulations incorporate this change. Because a partial payment installment agreement could be confused with a compromise of the liability, the proposed regulations clarify that an installment agreement does not reduce the amount of taxes, interest, or penalties owed. See H. Rep. No. 108-755, 108 th Cong., 2d Sess., 2005 U.S.C.C.A.N. 1341 (October 7, 2004).

The proposed regulations also clarify that the IRS may enter into an installment agreement that, by its terms, ends upon the expiration of the period of limitations on collection in section 6502 and §301.6502-1, or at some prior date. A partial payment installment agreement that ends prior to the expiration of the collection period of limitations would allow the IRS to collect the balance of the tax liability against any property belonging to the taxpayer or request the Department of Justice to institute a judicial action to reduce the liability to judgment or take other actions to enforce the federal tax lien. The proposed regulations do not limit the authority of the IRS to enter into partial payment installment agreements that run to the end of the collection period.

Section 843 of the AJCA amended section 6159(c) to exclude partial payment installment agreements from the scope of installment agreements that must be accepted by the IRS. The proposed regulations provide that installment agreements guaranteed under section 6159(c) must provide for the full payment of the liabilities.

Section 843 of the AJCA added new section 6159(d), requiring the IRS to review partial payment installment agreements every two years. (Former subsections (d) and (e) were redesignated (e) and (f).) The primary purpose of the review is to determine whether the financial condition of the taxpayer has significantly changed so as to warrant an increase in the value of the payments being made. See H. Rep. No. 108-755, 108 th Cong., 2d Sess., 2005 U.S.C.C.A.N. 1341 (October 7, 2004). The proposed regulations reflect this requirement.

The proposed regulations clarify the application of payments made pursuant to installment agreements. Consistent with Revenue Procedure 2002-26 (2002-1 C.B. 746), all payments will be applied in the best interests of the Government, unless the installment agreement provides otherwise. Current regulations provide rules for when the IRS may terminate an agreement but do not expressly provide that a taxpayer and the IRS may agree to end an agreement. The proposed regulations clarify that an installment agreement may be terminated by agreement between the taxpayer and the IRS, or may be superceded by a new agreement.



Proposed Effective Date

These regulations are proposed to be effective upon publication in the Federal Register of the final regulations.



Special Analyses

It has been determined that this notice of proposed rulemaking is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations and, because these regulations do not impose a collection of information under the Paperwork Reduction Act (44 U.S.C. section 3501), the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply to these regulations. Pursuant to section 7805(f) of the Code, this notice of proposed rulemaking will be submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.



Comments and Requests for a Public Hearing

Before these proposed regulations are adopted as final regulations, consideration will be given to any written comments (a signed original and eight (8) copies) or electronic comments that are submitted timely to the IRS. The IRS generally requests any comments on the clarity of the proposed rule and how it may be made easier to understand. All comments will be available for public inspection and copying. A public hearing may be scheduled if requested in writing by a person that timely submits written or electronic comments. If a public hearing is scheduled, notice of the date, time, and place for the hearing will be published in the Federal Register.



Drafting Information

The principal author of these regulations is G. William Beard, Office of Associate Chief Counsel (Procedure and Administration), Collection, Bankruptcy & Summonses Division.



List of Subjects in 26 CFR Part 301

Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income taxes, Penalties, Reporting and recordkeeping requirements.



Withdrawal of Proposed Regulations

Accordingly, under the authority of 26 U.S.C. 7805, the notice of proposed rulemaking (REG-100841-97) that was published in the Federal Register on December 31, 1997 (62 FR 68241) is withdrawn.



Proposed Amendments to the Regulations

Accordingly, 26 CFR part 301 is proposed to be amended as follows:



PART 301 --PROCEDURE AND ADMINISTRATION

Paragraph 1. The authority citation for part 301 continues to read in part as follows:

Authority: 26 U.S.C. 7805 * * *

Par. 2. Section 301.6159-0 is added to read as follows:

§301.6159-0 Table of contents.

This section lists the major captions that appear in the regulations under §301.6159-1.

§301.6159-1 Agreements for the payment of tax liabilities in installments.

(a) Authority.

(b) Procedures for submission and consideration of proposed installment agreements.

(c) Acceptance, form, and terms of installment agreements.

(d) Rejection of a proposed installment agreement.

(e) Modification or termination of installment agreements by the Internal Revenue Service.

(f) Effect of installment agreement or pending installment agreement on collection activity.

(g) Suspension of the statute of limitations on collection.

(h) Annual statement.

(i) Biannual review of partial payment installment agreements.

(j) Cross reference.

(k) Effective date.

Par. 3. Section 301.6159-1 is revised to read as follows:

§301.6159-1 Agreements for payment of tax liabilities in installments.

(a) Authority. The Commissioner may enter into a written agreement with a taxpayer that allows the taxpayer to make scheduled periodic payments of any tax liability if the Commissioner determines that such agreement will facilitate full or partial collection of the tax liability.

(b) Procedures for submission and consideration of proposed installment agreements --(1) In general. A proposed installment agreement must be submitted according to the procedures, and in the form and manner, prescribed by the Commissioner.

(2) When a proposed installment agreement becomes pending. A proposed installment agreement becomes pending when it is accepted for processing. The Internal Revenue Service (IRS) may not accept a proposed installment agreement for processing following reference of a case involving the liability that is the subject of the proposed installment agreement to the Department of Justice for prosecution or defense. The proposed installment agreement remains pending until the IRS accepts the proposal, the IRS notifies the taxpayer that the proposal has been rejected, or the proposal is withdrawn by the taxpayer. If a proposed installment agreement that has been accepted for processing does not contain sufficient information to permit the IRS to evaluate whether the proposal should be accepted, the IRS will request the taxpayer to provide the needed additional information. If the taxpayer does not submit the additional information that the IRS has requested within a reasonable time period after such a request, the IRS may reject the proposed installment agreement.

(3) Revised proposals of installment agreements submitted following rejection. If, following the rejection of a proposed installment agreement, the IRS determines that the taxpayer made a good faith revision of the proposal and submitted the revision within 30 days of the date of rejection, the provisions of this section shall apply to that revised proposal. If, however, the IRS determines that a revision was not made in good faith, the provisions of this section do not apply to the revision and the appeal period in paragraph (d)(3) of this section continues to run from the date of the original rejection.

(c) Acceptance, form, and terms of installment agreements --(1) Acceptance of an installment agreement --(i) In general. A proposed installment agreement has not been accepted until the IRS notifies the taxpayer or the taxpayer's representative of the acceptance. Except as provided in paragraph (c)(1)(iii) of this section, the Commissioner has the discretion to accept or reject any proposed installment agreement.

(ii) Acceptance does not reduce liabilities. The acceptance of an installment agreement by the IRS does not reduce the amount of taxes, interest, or penalties owed. (However, penalties may continue to accrue at a reduced rate pursuant to section 6651(h).)

(iii) Guaranteed installment agreements. In the case of a liability of an individual for income tax, the Commissioner shall accept a proposed installment agreement if, as of the date the individual proposes the installment agreement --

(A) The aggregate amount of the liability (not including interest, penalties, additions to tax, and additional amounts) does not exceed $10,000;

(B) The taxpayer (and, if the liability relates to a joint return, the taxpayer's spouse) has not, during any of the preceding five taxable years --

( 1) Failed to file any income tax return;

( 2) Failed to pay any required income tax; or

( 3) Entered into an installment agreement for the payment of any income tax;

(C) The Commissioner determine