Roz Marketing - March/April 2021


IRS Installment Agreements — Which One Is Right for Your Client?

The IRS allows taxpayers to pay off tax debt through an Installment Agreement (IA) after they can prove paying off the debt all at once is not possible. An IA is an agreement between the taxpayer and the IRS that fully pays the liability over time, generally 72 months. The reality is that 65%–70% of your tax resolution cases will be resolved through IAs. There are four types of Installment Agreements: 1. Full Pay IA: Per the 433-A, the client can full pay the balance due before CSED expires. 2. Partial Pay IA: Per the 433-A, the client cannot fully pay the balance before CSED expires. [Sometimes these are better than an offer in compromise (OIC), as the IRS does not generally consider equity in assets.] 3. A: Streamline IA: Under $25,000 (assessed balance), term 60 months, no 433-A, no lien filed. B: Streamline IA: $25,000–$49,999 (assessed balance), term 72 months, no 433-A, no lien filed with Direct Debit/433-D. C: Streamline IA: $50,000–$250,000 (assessed balance), must be paid within remaining life of CSED, no 433-A, lien WILL BE filed. Only available via ACS. 4. Currently Non-Collectible (CNC): Per 433-A, the taxpayer shows they have $0 disposable income and no ability to pay. These are a temporary Band-Aid, as these regularly get reviewed if income increases. Use

as a stepping stone for an OIC or for elderly people on fixed incomes. The immense VALUE you provide to IA clients is the following: 1. As their vigorous advocate, you are preventing the IRS from managing your client’s cash flow. 2. You (automatically) reduce the future Failure to Pay penalties by 50% (going from .5% to .25% per month). 3. You are making sure the IRS correctly codes the account with an IA status code preventing future garnishments and levies as long as your client remains compliant.

4. You are requesting, if applicable, First Time Penalty Abatement with ACS. Don’t overlook these different types of IAs, especially the Partial Pay IA. These are like a “back door OIC,” as they are much less intrusive and might be perfect for clients who have low disposable income but have assets that generally are not figured into the monthly payment amount. A lot of your clients can settle for less through a PPIA than an OIC.

–Michael Rozbruch

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