One of the changes made during the pandemic was the increased streamlined agreement for campus collections. Eric Green discusses the change and what this means for tax pros and taxpayers with back tax debts.
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IRS Makes the $250,000 Streamlined Installment Agreement Permanent by Tax Rep Network
One of the changes made during the pandemic was the increased streamlined agreement for campus collections. Eric discusses the change and what this means for tax pros and taxpayers with back tax debts.
The IRS’s New $250,000 Streamlined Installment Agreement
I don’t know if you noticed, but the IRS made permanent the $250,000 non-streamlined installment agreement. If you don’t know what I’m talking about, let me explain. Let’s start with a streamlined installment agreement. If you owe $50,000 or less and can fully pay within the time remaining on the collection statute, but no more than 72 months, the IRS will go ahead and set up an installment agreement. No financials are necessary. You can do it right over the phone or online. Easy peasy.
It’s convenient because taxpayers don’t have to disclose their assets. They don’t have to try to liquidate their IRAs or tap the equity in their house. You don’t have to disclose any of that. The IRS was starting a pilot program of about $100,000 over 84 months, but it was only for taxpayers who were with the automated collection campuses, not the ones with the revenue officers in the field. When COVID happened, that campus pilot program was expanded so that if you owe $250,000 or less and could fully pay within the time remaining on the collection statute, you could set up an agreement. No financials are necessary.
If you were with a revenue officer, the IRS views you as the biggest risk. Share on X
It was extremely helpful. I’ve been urging them to make this permanent. They informed us it’s now permanent. If you’re with a revenue officer, it’s still the old $50,000 over 72 months or the CSED, whichever is less. The reason for that is if you’re with a revenue officer, the IRS views you as the biggest risk. It’s payroll taxes. You’re a multi-time offender. That’s why you’re with a revenue officer. They’re not going to give you the benefit of the doubt. If you are somebody who’s with the campus collections, you can contact them.
If you owe $250,000 or less and can fully pay within the time remaining on the ten-year collection statute, you can set up an agreement. Usually, what we find is that it is far more flexible than if you have to submit financials. If you submit financials, the government is going to want the equity in the assets or at least have you attempt to get it. They’re going to restrict your allowable expenses to the standards that the IRS puts out. With this automated, under-250-over-CSED, 99% of the clients that we’ve helped in the last few years are much better off with that.
If you're already calling the IRS anyway, just ask about the first-time penalty abatement. Share on X
It’s a lower payment amount, which gives them more flexibility. It’s also that they’re less likely to default. What’s so interesting is that the IRS has been tracking this, and they tell us that the default rate on those pilot program 250-over-CSED agreements is lower than any other agreement. I think that’s why it’s more flexible for taxpayers. Also, taxpayers don’t have to pay us to do a financial, all of that. Just so you’re aware, it is now permanent.
What does this mean? What if you have a client that comes in, and you file the returns, and they’re over $250,000? Is it possible to pay down below $250,000? Can we somehow pay our way down and then set up this agreement? That’s one option. The other wrinkle or the other strategy that I would talk to you about is if you do get somebody, and they owe less than $250,000, you can call up and set up the streamlined agreement right over the phone. You need a 433-D, which is the form to set up the agreement. Have that handy so you can get that faxed over to them and set the agreement up.
Make sure to ask about first-time penalty abatement. Why not? You might be able to more than pay for yourself. Share on X
Always ask about first-time penalty abatement. Who knows? Normally, you would pull transcripts and check, but if you’re already calling the IRS anyway, just ask. What are they going to say? No? They ask, and they’re not eligible. They’re not eligible. More often than not, we find that they are eligible. In one case, we knocked $38,000 off their bill just by asking about first-time penalty abatement.
Strategies For Utilizing The New Agreement
What I’m going to leave you with after this short episode is this, if you have somebody who owes less than $250,000 and they can fully pay over the time on the collection statute, you can simply call up the government, assuming this is a new balance. They’re not in an agreement already. They can call up the IRS and set this up over the phone. If you’re doing that, make sure to ask about first-time penalty abatement. Why not? You might be able to more than pay for yourself. We did, especially in that case with the $38,000.
I wanted to let you know that. We talked about this when we had the IRS here updating us. We’ve discussed the $250,000 over the collection statute. They were watching it. It was always meant to be temporary. That has now been made permanent. Remember, it’s only for the campuses, not for revenue officers out in the field. Thanks, everybody. We’ll talk to you next week. Bye-bye.
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