Apologies to all for getting to this topic a month after the TIGTA report
was issued. Nevertheless, I want to take a moment to discuss the relevance of this report. The Treasury Inspector General audited the IRS’s handling of partial pay installment agreements. Partial pay installment agreements arise when the IRS reviews a taxpayer’s financial information and determines that the monthly amount the taxpayer can pay will not pay off the entire tax debt within the statute of limitations.
The Treasury Inspector General found that the IRS was not following their own requirements to review these installment agreements every two years. The IRS is suppose to review the agreements on a regular basis to determine the ability for greater collection. Tax practitioners have noticed for some time that our clients who have been placed into these installment agreements have not been followed-up on as the collection statute runs. For our clients, this has been a wonderful blessing, and often has resulted in significant reductions in what is paid versus what was owed.
Unfortunately for the taxpayer, the IRS has agreed with the findings and have stated they will work to implement better controls to ensure that proper reviews are done. This means for taxpayers in installment agreements, they will need to discuss with their tax advisor what the specifics are of their installment agreement. A reputable tax practitioner should have advised their client on the ramifications of each of the collection alternatives that the IRS provides. So taxpayers be forewarned, just because the IRS contacts you again regarding an installment agreement, it does not mean your prior representative did anything wrong. It may mean the IRS is finally doing what they were suppose to do all along.