Alphabet Soup for Installment Agreements (Video) (Course Id 2672)

• Who is this course for?
  This course is designed for CPAs, accountants, and IRS Enrolled Agents who need Continuing Professional Education (CPE), particularly those working with taxpayers seeking relief from IRS enforced collection actions.

• What is this course about or what problem does this course solve?
  The course provides an in-depth understanding of IRS installment agreements as a solution for taxpayers to manage federal tax liabilities over time instead of through immediate payment or enforced collection.

• How can the knowledge from this course be used?
  Professionals can use this knowledge to advise clients on eligibility, structure, and application processes for various types of IRS installment agreements, including partial payment and streamlined options.

• Why is this course important to a CPA, Accountant, or IRS Enrolled Agent?
  It equips tax professionals with critical skills to help clients navigate and negotiate installment agreements with the IRS, potentially avoiding levies and other enforcement actions.

• When is this course relevant or timely?
  This course is timely for the 2025 tax year and is especially relevant when clients face immediate IRS debt issues or need guidance under programs like the Fresh Start initiative.

• How is a course like this consumed or used?
  This video-based, self-study course is delivered through the NASBA QAS format, includes review and final exam questions, and requires a passing score of 70% for CPE credit.

This presentation covers installment agreements with the IRS as an alternative to enforced collection action. It covers various aspects of installment agreements, including the application process and specific types of agreements.

Key Points:

*   Alternatives to Enforced Collection: The IRS may defer payment for up to 120 days without supervisor approval if the taxpayer needs additional time to access funds.
*   Suspension of Levy Action: Levy action is suspended by law if a rejected or terminated installment agreement is appealed within 30 days of notification of rejection.
*   Automatic Acceptance: Statutory, Guaranteed, and Streamlined Agreements, including those under the "Fresh Start Program," may be automatically accepted.
*   Threshold for Financial Statement: As of March 2012, the threshold for using an installment agreement without submitting a financial statement was raised from $25,000 to $50,000.
*   Living Expenses: The IRS will allow a minimum fair living amount, based on national and local standards, subtracting that amount from income to determine the installment payment. Special circumstances like medical needs may cause deviation from these standards.
*   Immediate Payment: If an installment agreement is approved, the IRS officer will generally insist on an immediate payment of part of the outstanding liability, followed by equal monthly payments.
*   Urgent Need for Assets: If the taxpayer can show an urgent need for assets and net cash flow, the IRS may allow him to keep all or some of it, if it would be inequitable to seize the asset or if the IRS will be better off allowing the taxpayer to retain more assets or cash flow than national standards indicate.
*   Partial Payment Installment Agreements: These agreements can be used to reduce or settle a taxpayer’s final liability, but do not have the finality of an offer in compromise. It allows the taxpayer to pay part of the liability over time.

Video - NASBA QAS - NASBA Registry - IRS Enrolled Agents - 2672

Course Learning Objectives

1. Define the purpose of an Installment Agreement (IA) and explain how it enables taxpayers to pay federal tax liabilities over time rather than in a lump sum.
2. Differentiate between informal payment extensions and formal installment agreements, including the role of revenue officers in granting up to 120 days without supervisor approval.
3. Identify the conditions under which the IRS may reject an IA request, with particular focus on the taxpayer’s demonstrated ability (or inability) to pay.
4. Explain the consequences of defaulting on an IA, including termination notices, resumption of levy, and continued accrual of interest and penalties.
5. Recognize the appeal rights available when an IA is rejected or terminated, including the 30-day administrative appeal window and its impact on levy action.
6. Describe the statutory or guaranteed installment agreements and the limited circumstances in which the IRS is required to accept them without a Collection Information Statement.
7. List the statutory acceptance conditions for guaranteed IAs, including debt thresholds, three-year repayment agreements, and five-year compliance requirements.
8. Explain the significance of the Fresh Start / Streamlined IA initiative, including its intent to make repayment more accessible to a broader pool of taxpayers.
9. Identify the threshold increase effective March 2012 under Fresh Start, from $25,000 to $50,000, and discuss its impact on taxpayer eligibility.
10. Summarize the maximum repayment term (72 months) for streamlined agreements and evaluate how extending the term affects taxpayer affordability and IRS collection efficiency.
11. Discuss the requirement of direct debit payments for taxpayers using expanded streamlined IAs up to $50,000, and analyze why this condition reduces default risk.
12. Compare and contrast formal, conditional, and partial payment installment agreements (PPIAs) in terms of documentation requirements, scope, and legal effect.
13. Evaluate the role of Form 9466 (Installment Agreement Request) and explain when supplemental forms like Form 433-A (Collection Information Statement) are required.
14. Interpret how the IRS uses national and local standards to determine disposable income, and analyze how special circumstances (e.g., high medical costs) may justify deviations.
15. Assess the IRS’s authority to require follow-up financial statements for agreements exceeding 12 months, and discuss how changes in financial condition can lead to modification or termination.
16. Identify grounds for modifying or terminating an IA, such as inaccurate information, accrual of new liabilities, or missed payments.
17. Explain how the statute of limitations (SOL) is suspended during key IA periods, including pending proposals, 30-day rejection/termination windows, and appeals.
18. Outline the legal prohibitions on levy action during periods when an IA is pending, in effect, under appeal, or within post-rejection/termination grace windows.
19. Analyze the economic judgment required of revenue officers when balancing equitable treatment of taxpayers with the IRS’s duty to collect, particularly in allowing retention of assets or cash flow.
20. Discuss the differences between a PPIA and an Offer in Compromise, highlighting why a PPIA provides partial payment relief without the finality of an OIC.

Chapter 1 - Alphabet Soup for Installment Agreements

Chapter 1 Review Questions