For the first time in history, the Internal Revenue Service is
getting ready to impose a set of national standards to evaluate
installment agreements _ deals where delinquent taxpayers agree
to pay what they owe over time.
In the past, installment agreements were negotiated one-on-one
_ revenue agent to taxpayer _ and were highly subjective. In some
cases, taxpayers came out with favorable deals; in others, they
were left with little more than their socks, tax accountants
However, in the fall, the agency will issue a new set of
national guidelines that delineates just how much taxpayers can
spend for specific items _ such as food, clothing, utilities,
transportation and housing _ when they're paying tax bills in
Those willing and able to fall into the IRS budget are likely
to find their installment agreement requests granted. Those who
aren't are likely to be turned down _ unless they can persuade
revenue agents that there are compelling extenuating
circumstances that warrant bending the rules.
Some say the proposed national guidelines are a signal that
the kinder, gentler image the IRS has been promoting over the
past several years is a thing of the past. The IRS is throwing
away the carrot and going for the stick, says Peter Berkery,
manager of Research Institute of America's Washington bureau.
The IRS counters that this is no departure. The national
standards are not necessarily stricter than before _ they're just
being made uniform office to office, district to district, deal
to deal. Standard rules are necessary to eliminate inconsistent
treatment of taxpayers, said Steve Taylor, assistant director of
collections at the IRS in Washington, D.C.
"We are making these changes to bring more consistency and
fairness _ and to make this a more predictable process," Taylor
said. "There is no goal to be more harsh, and I don't think
that's going to be the across-the-board result."
In some significant ways, the national rules are merely a
formalized version of what's already considered accepted
practice. They'll spell out that the IRS only accepts installment
agreements under three basic circumstances:
When back tax bills amount to $10,000 or less.
When back tax bills can be paid off within three years.
When the taxpayer has no valuable assets or borrowing power that
would enable him or her to pay off the bill in any other way.
It will also clarify that the IRS gives taxpayers in the first
two categories fairly wide berth in negotiating a deal to pay
over time. If you owe a relatively small amount and can pay it
off in monthly installments within, say, a year or two, there's a
fairly good chance that the IRS won't even ask for a financial
statement before approving your proposal. …