Taxpayers are encouraged to pay in full and immediately all delinquent tax liabilities. However, “if full payment cannot be achieved by the Collection Statute Expiration Date (CSED), and taxpayers have some ability to pay, the Service can enter into Partial Payment Installment Agreements (PPIAs)” (IRS.gov, “Part 5. Collecting Process, Chapter 14. Installment Agreements, Section 2. Partial Payment Installment Agreements and the Collection Statute Expiration Date (CSED),” 8/21/2013). Before the PPIA can be granted, the equity in the taxpayer’s assets will have to be evaluated to determine if it can be used pay down the tax liability.
Although utilization of equity is not required, taxpayers will be expected to use the equity they have in assets to pay liabilities. If there is significant equity in assets, the IRS will consider seizing and/or levying in accordance with sections 5.10 and 184.108.40.206.2 of the Internal Revenue Manual.
When taxpayers owe more than $50,000, they are subject to a different set of rules specifically those required by the Automated Collection System (ACS). The ACS is a three-tiered CICS application. The CICS acronym stands for Customer Information Control System. The CICS is a computerized inventory system that maintains taxpayer information with regard to balance due and non-filer cases. The system particularly maintains the Integrated Data Retrieval System (IDRS) which houses this information. Customer service representatives use the system to “contact taxpayers, review their case histories, and issue notices, liens, or levies to resolve the cases” (IRS.gov, “Automated Collection System,” 8/21/2013).
Taxpayers are required to complete Form 433-F, Collection Information Statement or Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals. The IRS encourages voluntary payments. However, voluntary payments will not guarantee that the IRS will not pursue levy options.
Installment agreement set-up fees are based upon the type of agreement. For example, the IRS assesses a charge of $52 for a direct debit agreement; $105 for a standard agreement or payroll deduction agreement; and $43 to taxpayers with income below a certain level. If your agreement goes into default, then the IRS may assess a reinstatement fee. Penalties and interest will continue to accrue until your balance is paid in full.
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